GameStop
Careers at GameStop
Mission
GameStop’s mission is to make the most popular technologies affordable and simple.
Business segments
GameStop is a provider of video game and technology products. The firm operates five reportable business segments:
- United States – Video game products sold in the U.S.
- Canada – Video game products sold in Canada.
- Australia – Video game products sold in Australia.
- Europe – Video game products sold in Europe.
- Technology Brands – Includes the Spring Mobile business (operates AT&T branded wireless retail stores and Cricket branded pre-paid wireless stores) and the Simply Mac business (Simply Mac branded stores, which sell Apple products).
History
Gary Kusin was a Dallas-based general merchandise manager at Federated Department Stores. James McCurry was a consultant at Bain & Company’s office in San Francisco. Both had been classmates and friends at Harvard Business School. In 1982 McCurry met with Kusin about a proposal to launch a chain of stores selling software for computer and video games, burgeoning industries at the time.
McCurry believed there was a market for a specialty outlet for the items. Kusin, who had observed as specialty stores increasingly overtook department store sales, agreed. The men resigned at the end of the year and sought startup financing. They got little interest at first, but in 1983 businessman Ross Perot agreed to offer a $3 million credit line in exchange for one-third ownership.
The men used the funds to establish Babbage’s, Inc., named after British mathematician Charles Babbage, who is widely considered the inventor of the first major precursor of the computer. Perot convinced the two to open just one store initially until they knew the ins and outs of the business. In 1983 they opened the first Babbage’s retail store in a regional mall in Dallas.
McCurry managed the firm’s finances while Kusin acquired products from local distributors. Their business strategy consisted of a frequently updated product mix, a flexible store design with some dedicated sections, a competitive pricing system, and an uncommissioned sales staff that avoided too much technical jargon with customers. They met sales projections two months after opening.
Over the next few years the company expanded by opening dozens more stores. It developed a reputation for having the most popular game software. In 1988 it went public, and by 1994 it had 300 locations. Despite this success, it faced increasing competition from a variety of retail categories, including mass merchandisers, electronics stores, toy stores, and mail-order outlets.
Babbage’s responded to the threat by merging with retail chain Software, Etc. in 1994. A holding company called NeoStar Retail Group was formed and both firms became subsidiaries. NeoStar faced difficulty and a new holding firm was formed called Babbage’s, Etc. A plan was then made to launch a set of strip mall stores under the brand name GameStop; they were unveiled in 20 outlets in 1999.
That year, Babbage’s, Etc. also introduced its first eCommerce website, and also named it GameStop. In October Barnes & Noble bought Babbage’s. In 2000 it purchased Funco, a video game retailer, and Babbage’s became its subsidiary. Funco was renamed GameStop. In 2002 B&N took GameStop public. In 2004 B&N distributed its stake in GameStop, making GameStop an independent firm.
Business model of GameStop
Customer Segments
GameStop has a mass market business model, with no significant differentiation between customer segments. The company targets its offerings at anyone who seeks video game and tech products.
Value Proposition
GameStop offers four primary value propositions: accessibility, convenience, innovation, and brand/status.
The company creates accessibility by providing a wide variety of options. It has acquired numerous other game and technology firms in its history, including EB Games, Rhino Video Games, Micromania, Jolt Online Gaming, Spawn Labs, Impulse, BuyMyTronics, and Spring Mobile. These purchases have served to diversify its portfolio and greatly expand its capabilities. GameStop also offers accessibility by making its locations easy to reach. Its stores are typically placed in high-traffic shopping malls, strip centers, and pedestrian spaces in major metropolitan areas.
The company offers convenience by making life simpler for customers. Through its buy-sell-trade program, it enables consumers to trade-in video game software/hardware, tablets, and smartphones that they no longer use or play. Customers are given trade credits to use for new product purchases.
The company embraces innovation as a part of its culture. It operates the GameStop Technology Institute (GTI), a business unit that is dedicated to establishing partnerships with academic institutions and top tech firms in order to explore and deliver innovative technology and business solutions. Specifically, the partners share resources and collaborate on research and development.
The company has established a powerful brand due to its success. It is the world’s largest omnichannel video game retailer, the largest AT&T authorized reseller, the largest Apple-certified products reseller, and owner of www.thinkgeek.com, one of the world’s largest sellers of collectible pop-culture themed products. It maintains over 7,500 stores across 14 countries with more than 40,000 employees. Lastly, it owns Game Informer magazine, the leading print and digital video game publication in the world.
Channels
GameStop’s main channel is its network of retail stores located throughout the U.S., Canada, Australia, and Europe. It also sells products through its main website and various specific brand websites. The company promotes its offering through its website, social media pages, TV/online/radio advertising, loyalty programs, and in-store marketing efforts such as catalogs.
Customer Relationships
GameStop’s customer relationship is primarily of a self-service nature. Customers utilize its products while having limited interaction with employees. Its website provides information about topics such as product availability, upcoming game release dates, and store locations.
Key Activities
GameStop’s business model entails distributing video game and technology products to its customers.
Key Partners
GameStop’s key partners are the more than 80 manufacturers, distributors, and software publishers that provide the products it distributes. Its top vendors are Sony (27% of products it purchases), Microsoft (19%), Nintendo (11%), and Electronic Arts (10%).
The company also maintains an affiliate program through which it invites third parties to promote it on their platforms (websites, mobile apps, etc.). Referrals that lead to a purchase result in a commission for the third party.
Key Resources
GameStop’s main resources are its physical resources, namely its network of over 7,500 stores spread across the U.S., Australia, Canada, and Europe. Other essential physical resources are its 353,000 square foot distribution center in Grapevine, Texas and 260,000 square foot distribution center in Louisville, Kentucky, which it uses to distribute products to its U.S. stores.
Lastly, the company depends on human resources in the form of its over 20,000 full-time hourly and salaried employees and between 30,000 and 62,000 part-time hourly employees around the world.
Cost Structure
GameStop has a cost-driven structure, aiming to minimize expenses through significant automation and low-price value propositions. Its biggest cost driver is cost of sales, a variable expense. Other major drivers are in the areas of sales/marketing and administration, both fixed costs.
Revenue Streams
GameStop has one revenue stream: revenues it generates from the sale of its products to customers in its various channels.
