GameStop 2013 Annual Report Download - page 25

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Kongregate.com is a leading web and mobile gaming platform that attracts more than 18 million monthly unique visitors.
Kongregate’s mobile publishing division has several titles available in both the Apple and Google app stores. The majority of
Kongregate’s revenues come from in-game transactions utilizing a proprietary virtual currency called Kreds.
Enhancing our Image as a Destination Location. Our video game stores and e-commerce sites serve as destination locations
for game players, mobile electronics consumers and gift givers due to our broad selection of products, compelling loyalty program
offers, game-oriented environment, trade-in programs and unique pricing proposition. We offer all major video game platforms,
provide a broad assortment of new and pre-owned video game products and popular mobile devices 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.
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 rapid-response distribution methods
in our efforts to be the first-to-market and consistently in-stock for new physical and digital video game products. This highly
efficient distribution network is essential, as a significant portion of a new title’s sales will be generated in the first few days and
weeks following its release. As the world’s largest retailer of video game products with a proven capability to distribute new
releases to our customers quickly and capture market share immediately following new product launches, we believe we regularly
receive larger allocations of popular new video game products. On a daily basis, we actively monitor sales trends, customer
reservations and store manager feedback to ensure a high in-stock position for each store. To assist our customers in obtaining
immediate access to new releases, we offer our customers the opportunity to pre-order products in our stores or through our Web
sites prior to their release.
Investing in our Information Systems and Distribution Capabilities. We employ sophisticated and fully-integrated
inventory management, store-level point-of-sale and financial systems and state-of-the-art distribution facilities. These systems
enable us to maximize the efficiency of the flow of over 5,000 SKUs, improve store efficiency, optimize store in-stock positions
and carry a broad selection of inventory. Our proprietary inventory management systems enable us to maximize sales of new
release titles and avoid markdowns as titles mature and utilize electronic point-of-sale equipment that provides corporate and
regional headquarters with daily information regarding store-level sales and available inventory levels to automatically generate
replenishment shipments to each store at least twice a week. In addition, our highly-customized inventory management systems
allow us to actively manage the pricing and product availability of our pre-owned video game products across our video game
store base and to reallocate our inventory as necessary. Our systems enable each store to carry a merchandise assortment uniquely
tailored to its own sales mix and customer needs. Our ability to react quickly to consumer purchasing trends has resulted in a target
mix of inventory, reduced shipping and handling costs for overstocks and reduced our need to discount products.
Expanding our Mobile Business. In 2011, we began to buy, sell and trade pre-owned mobile devices, including gaming
tablets, new tablets and related services and accessories for those devices, in our video game stores. We believe taking trades of
these devices is a logical extension of our expertise in buying, selling and trading of pre-owned video game products. We use our
centralized refurbishment centers in the U.S. and in certain international locations to refurbish these devices and then re-sell them
in our stores. As of February 1, 2014, we were selling select pre-owned electronics in all of our U.S. stores and on our Web site
at www.gamestop.com, and in a majority of stores in our international markets. We plan to continue to drive awareness of this
business in our stores in fiscal 2014. As the proliferation of smartphones and tablets continues and those devices are increasingly
used for playing digital games, the market for such devices and the marketing of related games provide us opportunities to grow
our revenues and profits.
Expanding our Technology Brands businesses. Following on the success of extending our buy-sell-trade model into our
mobile business, we are seeking other opportunities to extend our core competencies to other products and retail categories in
order to continue to grow our company. We believe our core competencies include the following:
• Real estate knowledge, including extensive relationships with landlords, portfolio management, negotiating skills and
risk mitigation;
• Experience in rapid growth retail environments with a history of opening 300-400 stores annually;
• Knowledge of buy-sell-trade programs, including pricing algorithms, inventory balancing, refurbishment capabilities
and secondhand dealer laws;
• Human resource management practices, including hiring, training, systems and processes;
• Multi-unit management in small, specialty retail stores, with expert staff in assisted selling environments and limited
staffing models;