Gamestop - Sap

Table of Contents

Executive Summary 2

Background Information 3

Brief History 3

Type and Format of Retailing Activities 3,4

Key Competition and Competitive Position in Marketplace 4,5

Target Customer Profile 5

Retail Marketing Strategy Description and Analysis 5

Product 5,6

Place 6

Promotion 6,7

Price 7

Presentation 7

People 8

Financial Analysis - Trend Analysis (GameStop & Best Buy): 8,9

Financial Analysis - Ratio Analysis (GameStop & Best Buy): 9,10,11,12

Summary: Strategy Recommendations 12,13

Appendices 14,15,16,17,18,19

References 20,21

Executive Summary

In 2010, GameStop has shown a growth even with the gaming industry not fully recovered from the economy. GameStop has even gained market share over its competitors. There were positive signs in the HD console category and in the consumer adoption of their digital products offerings. GameStop really wanted to focus in on their multichannel strategy in 2010 and that showed to pay dividends for them. Financially, GameStop's steady operating cash flows allowed them to purchase $381 million of GameStop stock. They also have minimal debt after reducing their debt by 44% or close to $200 million in debt. (GameStop Annual Report, 2010, p.7)

2011 should allow for shareholders to smile once more because it is estimated that 100 new stores will be opening and operating by the end of the fiscal year. This will create more jobs for the economy and will drive revenue up. The launch of the "PowerUp Rewards" program has shown great success and only continues to get better. After gaining market share on competitors last year, GameStop is preparing to capture more by utilizing their advertising costs to promote the GameStop brand name.

Looking at the financial trends and ratio analysis excel charts, there may be some insight as to how GameStop can do a better job at capturing even more market share than they might have anticipated. At the end of this document there will be a summary of this entire report as well as strategy recommendations that may help GameStop in the future.

Background Information

History of GameStop

GameStop was once a small software company in Dallas, Texas named Babbage's. Then from a series of mergers Babbage's became GameStop. The first merger in GameStop's history was Software Etc., and later in 1999 Babbage's Etc. was sold to Barnes & Nobles. By 2000 Babbage's Etc. became a subsidiary of Funco, a company acquired by Barnes & Noble in that very same year. At the end of 2000 Funco changed its name to GameStop.

In 2004, GameStop bought back six million shares of stock, to branch off of Barnes & Noble to become a solely owned company. From 2005 to 2008, GameStop acquired companies such as Electronics Boutique (EB Games), Rhino Video Games, and Micromania, which was France's leading video game retailer. In 2009, GameStop launched its "Looking to the Digital Future", which sparked the acquisition of Jolt Online Gaming, an Ireland-based publisher of free-to-play titles and Kongregate in 2010, a fast growing free-to-play gaming market. (GameStop Company History, 2011)

Type and Format of Retailing Activities

GameStop is a Brick and Mortar retailing business from which they offer a face-to-face customer experience and possess a store to conduct their business. GameStop has created its own world called GameStop Nation. This nation is comprised of many video game players from thousands of local game communities around each store. GameStop uses many touch points to communicate with GameStop nation. They include personal one on one attention, in store service, and GameStop's website from which customers can pre-order games they know sell quickly in stores.

GameStop uses e-commerce as a type of format for their retailing activities. Their websites are currently running in eight different countries and their U.S. site, GameStop.com, is a website in which customers can go to purchase any sort of product that GameStop has to offer. GameStop has realized that e-commerce is essential to their strategy because of how quickly online sales have grown.

Key Competition and Competitive Position in Marketplace

GameStop is a hard company to compare with other businesses mainly because GameStop is a one dimensional retailing store. They have one purpose with their stores and that is to sell anything that has to do with video games, and only video games. It is tough to compare them because their competitors all are multidimensional companies that have a large inventory. That being said, GameStop's main competition is Best Buy, Amazon, and Wal-Mart, but any place that sells software specifically for gaming is considered a competitor of GameStop.

Below is a SWOT analysis that was acquired from Datamonitor. They are the leading business information company specializing in industry analysis. (Datamonitor, 2010, p1-8, 8p)

From the following analysis it is important to consider how well GameStop is doing as a company. GameStop is one of the largest video game and software retailing companies with over 6,000 stores located internationally and in the U.S. They also have a low amount of debt with increasing net profit margins. The real aspect to look at is the opportunities that GameStop still has in order to gain even more market share. The gaming market is a huge one and online sales are going up as the economy is at a standstill. One of their threats is the intense competition eats away at the market share. Competition is always going to be a threat, but as long as GameStop keeps the current business plan they have now I feel confident enough that they can overcome this threat.

Target Customer Profile

GameStop has made it clear that anyone and everyone is a target customer of GameStop. Everyone knows someone who likes to play video games, whether it is on a counsel or a PC, there is always a need for a gaming store like GameStop. GameStop believes that