GameStop 2014 Annual Report Download - page 32

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Multichannel
We operate several electronic commerce websites in various countries, including www.gamestop.com,www.ebgames.com.au,
www.ebgames.co.nz,www.gamestop.ca,www.gamestop.it,www.gamestop.ie,www.gamestop.de,www.gamestop.co.uk and
www.micromania.fr,thatallow our customers to buy video game products and other merchandise online and, in some cases, allow
customers to reserve merchandise online and then pick it up in stores, or order products that may not be in-stock in stores and have
it shipped to their homes. The sites also offer customers information and content about available games, release dates for upcoming
games, and access to store information, such as location and product availability.Additionally, we offer over 1,500 titles of digitally
downloadable PC video games at www.gamestop.com.E-commerce results are included in the geographic segment where the
sales originate.Additionally,with the launch of our new GameStop mobile app in 2014, smart phone users can browse our extensive
product selection and experience an enhanced PowerUp Rewards dashboard. We estimate that the GameStop mobile app has been
installed over 5million times.
Additionally,in2014, we launched the GameStop Technology Institute to partner with leading technology corporations and
academic institutions to enhance consumer interaction technologies and develop business solutions that help to drive traffic to all
of our retail channels.
Kongregate
We operate Kongregate, which is aleading web and mobile gaming platform. Over 25,000 developers have uploaded more
than 90,000 games to www.kongregate.com that have seen over 3.3 billion gameplays since its launch. The majority of Kongregate’s
revenues come from its mobile apps and in-game transactions utilizing aproprietary virtual currency called Kreds. Kongregate’s
mobile publishing division has several titles available in boththe Apple and Google app stores.
Advertising
Our stores are primarily located in high traffic, high visibility areas of regional shopping malls, strip centers and pedestrian
shopping areas. Given the high foot traffic drawn past the stores themselves, we use in-store marketing efforts such as window
displays and “coming soon” signs to attract customers, as well as to promote our products. Inside our stores, we feature selected
products through the use of vendor displays, “coming soon” or preview videos, signs, catalogs, point-of-purchase materials and
end-cap displays. These advertisingefforts are designed to increase the initial sales of new titles upon their release.
On aglobalbasis, we receive cooperative advertising and market development funds from most of our manufacturers,
distributors, software publishers and accessory suppliers to promote their respective products. Generally,vendors agree to purchase
advertising space in one of our advertising vehicles. Once we run the advertising, the vendor pays us an agreed amount.
We have loyalty programs in all of the markets in which we operate. Our various loyalty programs total over 41 million
members worldwide. These programs are designed to incent our customers to shop more often at our stores and to allow us to
market directly to our customers based on their individual tastes and preferences. Our loyalty programs provide members with
the opportunity to earn unique video game related rewards not available through any other retailer.Vendors also participate in
these programs to increase the sales of their individual products. Our PowerUp Rewards program in the United States gives our
customers the ability to sign up for afreeorpaidmembership that offers points earned on purchases in our stores, on our U.S. website
and on our Kongregate website, which can be redeemed for discounts or merchandise. The program’s paid tier also includes a
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.Inaddition, 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 increaseaswecontinue to expand our membership base and build our brand.
Information Management and Distribution
Our operating strategy involves providing abroad 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
storeefficiency and optimize store in-stock and overall investment in inventory.
Distribution. We operatedistribution facilities in various locations throughout the world, with each location strategically
located to support the operations in aparticular 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
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