GameStop 2013 Annual Report Download - page 32

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subscription to Game Informer magazine, additional discounts on selected merchandise and additional credit on trade-ins in our
stores.
In the last several years, as part of our brand-building efforts and targeted growth strategies, we expanded our advertising
and promotional activities in certain targeted markets at certain key times of the year. In addition, we expanded our use of television
and radio advertising in certain markets to promote brand awareness and store openings. We expect our investment in advertising
through our loyalty programs to increase as we continue to expand our membership base and build our brand.
Information Management
Our operating strategy involves providing a broad merchandise selection to our customers as quickly and as cost-effectively
as possible. We use our inventory management systems to maximize the efficiency of the flow of products to our stores, enhance
store efficiency and optimize store in-stock and overall investment in inventory.
Distribution. We operate distribution facilities in various locations throughout the world, with each location strategically
located to support the operations in a particular country or region. In order to enhance our first-to-market distribution network,
we also utilize the services of several off-site, third-party operated distribution centers that pick up products from our suppliers,
repackage the products for each of our stores and ship those products to our stores by package carriers. Our ability to rapidly
process incoming shipments of new release titles at our facilities and third-party facilities and deliver those shipments to all of
our stores, either that day or by the next morning, enables us to meet peak demand and replenish stores. Inventory is shipped to
each store at least twice a week, or daily, if necessary, in order to keep stores in supply of products. Our distribution facilities also
typically support refurbishment of pre-owned products to be redistributed to our stores.
We distribute products to our U.S. stores through a 362,000 square foot distribution center in Grapevine, Texas and a
260,000 square foot distribution center in Louisville, Kentucky. We currently use the center in Louisville, Kentucky to support
our first-to-market distribution efforts, while our Grapevine, Texas facility supports efforts to replenish stores. The state-of-the-
art facilities in both U.S. locations are designed to effectively control and minimize inventory levels. Technologically-advanced
conveyor systems and flow-through racks control costs and improve speed of fulfillment in both facilities. The technology used
in the distribution centers allows for high-volume receiving, distributions to stores and returns to vendors.
We distribute merchandise to our Canadian segment from two distribution centers in Brampton, Ontario. We have a
distribution center near Brisbane, Australia which supports our Australian operations and a small distribution facility in New
Zealand which supports the stores in New Zealand. European segment operations are supported by six regionally-located
distribution centers in Milan, Italy; Memmingen, Germany; Arlov, Sweden; Valencia, Spain; Dublin, Ireland; and Paris, France.
We continue to invest in state-of-the-art facilities in our distribution centers as the distribution volume, number of stores supported
and returns on such investments permit.
Digital Distribution. We have developed proprietary technology to work in conjunction with developers, as well as
Microsoft and Sony, to enable us to sell DLC in our stores and on our e-commerce sites. The DLC typically available today consists
of add-on content developed by publishers for existing games.
Management Information Systems. Our proprietary inventory management systems and point-of-sale technology show
daily sales and in-store stock by title by store. Our systems use this data to automatically generate replenishment shipments to
each store from our distribution centers, enabling each store to carry a merchandise assortment uniquely tailored to its own sales
mix and rate of sale. Our call lists and reservation system also provide our buying staff with information to determine order size
and inventory management for store-by-store inventory allocation. We constantly review and edit our merchandise categories with
the objective of ensuring that inventory is up-to-date and meets customer needs.
To support most of our operations, we use a large-scale, Intel-based computing environment with a state-of-the-art storage
area network and a wired and wireless corporate network installed at our U.S. and regional international headquarters, and a secure,
virtual private network to access and provide services to computing assets located in our stores, distribution centers and satellite
offices and to our mobile workforce. This strategy has proven to minimize initial outlay of capital while allowing for flexibility
and growth as operations expand. Computing assets and our mobile workforce around the globe access this environment via a
secure, virtual private network. Regional communication links exist to each of our distribution centers and offices in international
locations with connectivity to our U.S. data center as required by our international, distributed applications.
Our in-store point-of-sale system enables us to efficiently manage in-store transactions. This proprietary point-of-sale system
has been enhanced to facilitate trade-in transactions, including automatic look-up of trade-in prices and printing of machine-
readable bar codes to facilitate in-store restocking of pre-owned video games. In addition, our central database of all pre-owned
and value video game products allows us to actively manage the pricing and product availability of our pre-owned video game
products across our store base and reallocate our pre-owned and value video game products as necessary.