Submission by: Group 2

Members: Ajinkya Poundrik | Avinash Murali Nair | Baidyanath Bose | Balakrishnan M. | Jeevan M. |
Nishant Prakash
Retail Management
Case Presentation on: GameStop
GameStop The Business & Recurring Challenges faced
2
New and used game Accessories
for PCs and gaming consoles
New and used
Software and
Hardware for PCs and
gaming consoles
Strategy guides,
Action Figures, DVDs
and other related
merchandise
Issue 2: How will
GameStop Counter the
challenge posed by
digital downloading?
Issue 1: Can GameStop
continue with their
aggressive store growth?
Issue 3: Will the used
product business
continue to grow?
Became the worlds largest video game retailer in 2005
Spread across 14 countries with 4490 stores with more than 5000 SKUs of constantly changing in-store inventory selection
Industry Analysis
3
In US Market- $11.5 Billion
In Europe Market- $9.5
billion
In US Market- 21%
Worldwide- 11%
New video game=$34,
Old video game- $13
Holiday season
Next gen consoles/games
(Xbox 360, PS3 etc.)
Based on type of video games:

Sports, Action, puzzle/strategy,
children/family, adventure and
simulation.
Based on console technology:

Hard drive/storage, bit-processing
speeds and portability/format
Based on length of time spent:

Devoted gamers: played 6 to 7 days a week for long time periods,
41% of total gaming audience, made up 52% of dollars spent on
games. Play action, sports and simulation games
Social gamers: Played 4 to 5 times a week for shorter periods, 31%
of gamin audience, 35% of spending on gaming. Play sports and
fighting games.
Casual gamers: played once or twice a week for short periods, 28%
of gaming audience, 13% of dollars spent. Play puzzle and strategy
games
Sales
Industry Analysis
4
Portable games like
Nintendos Gameboy
helped manufacturers
to increase and
maintain sales during
the release of console
systems. Wide variety
of games, wireless
capability and lower
cost led to increase in
sales
Next Generation
consoles like Xbox 360
and PS3 continued
gaining popularity and
increasing gaming sales
Used late generation
consoles started
leading to increase in
trade-ins and sales.
Allowed the
continuation of
producing old model
games. Increase in
number of people
using two or more
consoles by 15%
Continuous decline in
retail PC game sales.
Traditional PC games
were being adopted
and modified to fit
gaming and portable
consoles. Very few
games being developed
for the PC platform
only
Gaming Trends
Company Details
5
Trade In
Support
Margin
Capitalization
Merchandizing
Process
Supplier
Reliance
Trade In Process
Employee
Relation
Customers brought their old console or games
to trade in
Game stops employee inspected the product
and trade in pride were allocated
Customers usually had 2 option
Exchanged games or received cash
The price margin was very high
80% of customers used trade in credit to buy
new games or systems
There were instances of shortage of
inventory for used games

Huge margin were made from
used video game & hardware
Margin were between 45% -
85%
Inventory management system
helped in decreasing holding
days from 80 to 72 days
Helped in providing real time
trade in quotes
Replenish the stock twice a
week
Games and systems were merchandized
according to systems
New and Used games were placed next to
each other - helped in price comparison
Best selling system and games were
placed near the front
Xbox 360 and Nintendo DS Premier spot
Highly concentrated Suppliers
Nintendo, Sony, Microsoft Major console
developers
EA, Activision and Acclaim Largest game publishers
Nintendo and EA comprised 25% of Game stop
purchases
Marketing, Advertising materials and money were
provided by Game and Console developers
More than 33000 employees
Employees were well informed about
the gaming industry and Game stop
product line
Each store employed 1 manager, 1
assistant manager and up to 6 part
time associates
Company Processes
6
Company Details
Company Growth
Concept of Selling used video games
was relatively new
Game Stop wanted to be recognized as
The destination for new and used
video games and systems
Planned to change all its EB brand
store to Game stop brand store by
2007
GameStop.com and EBgames.com
Had an option to receive game by
mail, reserve game or pick up at
retail store
Game informer Magazine sold at
GameStop, Barnes and Noble
It served as marketing tool
W
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&

M
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Operated in 4490 store through out the
world
Average size was 1500 square feet
Mall store carried new items and few
used items while Strip centre (55%)
carried a balanced mix of new and
used items
Strip centre were more profitable

Since 2003, Game Stop
grew at an average of
20% per year
Strong cash flow
Company was valued
at 9.2 billion dollars
F
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C
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G
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T
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Primary markets were
USA and JAPAN
Secondary Markets
were Europe, S. Korea
and Mexico
US gamers preferred
sports title, Japanese
preferred strategy
India , China emerging
markets
I
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T
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O
N

Electronic Game Enthusiastic
Value oriented casual gamers
Seasonal gift givers
T
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C
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Understanding the competition
7
Porters Five Forces
- Industry is attractive &
competitive pricing give High
bargaining power to buyers


- Industry is attractive and up for
innovation High bargaining
power with the right strategy for
marketing and retailing
- Suppliers can forward integrate
- Advancement in technology
Allows emergent players
- Digital games market is growing
Identifying the right segment
of digital/online reduces threat
- Consumer shift to Social Media
game Cheaper alternative
- Game rental establishments

- Competitors (box store retailer)
selling popular games are high
- Switching cost is low if right
medium (digital/online) is
identified
Suppliers bargaining power
Threat of new entrants
Buyers bargaining power
Threat of substitutes Threat of competitors
Gaming Industry
H
M
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H
M
Competitive Landscape & Advantages
8
Successful retail model:
- 4490 retail store worldwide
- 5000 SKUs of constantly changing in
store selection
- Owned gaming magazines (Game
Informer) and e-commerce websites
(gamestop.com and ebgames.com)
Employee relations:
- Huge employee strength that was
knowledgeable about games &
consoles
- Employees were allowed to take
games home to keep up to date on
the products
Robust processes:
- Trade-In process allowing customers
to trade in their used games
- Strategy of trade-in price being
greater than the monetary price
- Trade-In Support: Used games
allowed GameStop to support
declining rev.
Brand Management:
- Concept of selling used games was
relatively new
- Projected itself as the only
destination for used games, new
games & gaming systems
Competitive Landscape

1. Used Video Game Retailers
- Competition at the local level
- Offering was not new &
selection was not wide
2. Box Store Retailers
- Carried many products
- Easily accessible
- Limited selection (having only
proven games)
3. Rental based stores
- Monthly fee-based structure
- Expansion into new & used
games
4. Online Purchase & Rental sites
- Used games were available for
a cheaper price with no quality
assurance
- Gave convenience of ordering
online & delivering via mail




Competitive Advantages
Recapturing the current scenario
9
Low entry barriers and changes in
technology (digital) have attracted a
number of newer competitors
Higher Buyer Power: Can check for
prices online and compare
Higher Supplier Power: Can have
their own platforms in the future
Virtually no switching costs,
especially in case of popular
substitutes like Mobile and Social
Media games
Unlike competitors, it has an established
Brand Image and an own magazine for
marketing the brand and offerings
Best of both worlds: Broad Differentiator
Positioning new games attract hardcore
gamers & gift-shoppers while old games
appeal to loyalists & casual gamers
Unparalleled After Sales Service, Human
Resource Management and Inventory
turn-over rate
Positives and Negatives
In the Current Scenario
What are the options?
10
Status-quo Backward Integration
Product Extensions Focus on Online Medium
Huge Cash piles and lower
Capex means that the
company can look to further
increase the number of
stores
Focus should be on strip
malls considering the huge
demand for used products,
profitability and reach
Regardless of strategies,
customers should be pushed
to open online accounts to
facilitate CRM initiatives
RECOMMENDATION
11
ONLINE PRESENCE
Risk Free venture
Introduce gradually along with
the Physical stores
Avoid losing loyal customers
who want to switch to online
games
Can also capture the market
that is oriented towards online
gaming build loyalty
PRODUCT EXTENSION
Can attract hardcore gamers
Can boost sales in off-seasons
Increase brand loyalty
CONTRACT WITH SUPPLIERS
Can reduce competition in the
market
Tradeoff: Increase in Suppliers
bargaining power
BACKWARD INTEGRATION
Can bank on Gamestops huge
cash reserve
Reduce Suppliers bargaining
power
Competitive Advantage

IMPLEMENTATION
Online Presence
STEP 1: Hire a Top End Website development team to integrate the 2 current websites (already done)

STEP 2: Develop payment gateways and product delivery service by partnering with Banks and Transport companies

STEP 3: Implementing this and integrating with the current sales strategy Task assigned to Sales and Marketing Manager

STEP 4: Create department and deploy team to streamline both online and offline platform

STEP 5: Employ gamification techniques in online platform to engage gamers and reduce switching to other online platforms




Product Extension and Contract with suppliers
STEP 1: Extend the product line in both the online and offline platform to attract hardcore games & offset seasonal sluggishness

STEP 2: Establish contracts with suppliers like EA Sports & Nintendo to develop games for Gamestop, thus limiting competition
THANK YOU !!!