GameStop 2014 Annual Report Download - page 33

store at least twice aweek, or daily,ifnecessary,inorder to keep stores in supply of products. Our distribution facilities also
typically support refurbishment of pre-owned productstoberedistributed to our stores.
We distribute video game products to our U.S. stores through a353,000 square foot distribution center in Grapevine, Texas
and a260,000 square foot distribution center in Louisville, Kentucky.Wecurrently use the center in Louisville, Kentucky to
support our first-to-market distribution efforts, while our Grapevine, Texasfacility 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 adistribution
center near Brisbane, Australia which supports our Australian operations and asmall distribution facility in New Zealand which
supports the stores in New Zealand. European segment operations are supported by five regionally-located distribution centers in
Milan, Italy; Memmingen, Germany; Arlov,Sweden; 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 developedproprietary technology to work in conjunction with developers, as well as Microsoft
and Sony,toenable us to sell DLC and full-game downloads in our stores and on our e-commerce sites. The DLC typically available
today consists of add-on content developed by publishersfor 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 amerchandise assortment uniquely tailored to its own sales mix and
rate of sale. Our call lists and reservation system also provide our buying staffwith 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 customerneeds.
To support most of our operations, we use alarge-scale, Intel-based computing environment with astate-of-the-art storage
area network and awired and wireless corporate network installed at our U.S. and regional international headquarters, and asecure,
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.
Field Management and Staff
Each of our VideoGame Brands stores employs, on average, one manager,one assistant manager and between two and ten
sales associates,manyofwhomare part-time employees. Each store manager is responsible for managing their personnel and the
economic performance of their store. We have cultivated aworkenvironment that attracts employees who are actively interested
in electronic games. We seek to hire and retain employees who know and enjoy working with our products so that they are better
able to assist customers. To encourage them to sell the full range of our products and to maximize our profitability,weprovide
our employees with targeted incentive programs to drive overall sales and sales of higher margin products. In certain locations,
we also provide certain employees with the opportunity to take home and try new video games, which enables them to better
discuss those games with our customers. In addition, employees are casually dressed to encourage customer access and increase
the “game-oriented” focus of the stores.
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 and the opportunity
to communicate directly with our executives. We have invested in significant management training programs for our store managers
and our district managers to enhance their business management skills. We also sponsorannualstore 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.
Our U.S. VideoGame Brands store operations are managed by four market vice presidents of stores and 30 regional store
operations directors. The regions are further divided into districts, each with adistrict manager covering an average of 14 stores.
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