How do you ensure this continued stream of knowledgeable staff? Other things, like timeliness, that's easy to control -- well, it's not easy, but it's a logistics issue. Making sure that you have the kind of staff that you want in your store, across the entire chain, which is getting larger and larger every day, it could be a challenge.

BM: I think that one of the biggest things that we've done, especially really since a year ago this time, is we left this conference and the focus, all the way from our executive management down, has been on the retention of our associates. And again, the numbers are amazing. We're going to have 83-plus-percent of our managers that are running our stores this year, this won't be their first Christmas.

TB: Ninety-eight percent of the people who are at the conference this year have been through a holiday with GameStop before.

BM: Either as an assistant manager and now they've been promoted to a manager, or...

TB: What other person in retail, much less in video game retail, could boast that type of percentage? So the first thing, I agree with you, Bob, is that we've got to retain our people. The other thing is that we've just launched our most aggressive training efforts. We're working with people and saying, "This is how you continue to offer great service to the core customer. Here's how you really offer a great customer experience to the expanded audience as well."

How do you retain those people? What's your strategy for keeping those people engaged with GameStop?

BM: It's really been, as I mentioned, from a high level, it's been a focus of letting them know, and making them feel like they have a voice from within the organization and making them proud of the organization, and who we are. Keeping them informed of where we're going as an organization so they feel like they're part of the process rather than just coming in and punching in their time. They actually engage in that process with us.

TB: Absolutely. Recognition has been a big part of it. Training, we've doubled our training efforts. We have actually doubled our field HR staff to deal with it. So we've really invested a lot of money in this effort -- so it wasn't just a, "Go out, and let's do better." We've really invested a lot of money and effort in terms of retaining them, and it's worked. The great news is that our turnover is less than half of what it was a year ago.

Something that ties into the "GameStop Experience" -- I went to the tournament store in San Jose. I saw the Smash Bros. tournament. It's among the first that was rolled out with the concept, correct?

TB: It is one of the first. That is one of the first stores -- and by the way, that's the largest tournament that's ever been held, from a retail perspective, in video games. We're actually taking the concept of that store, and there are things that we're going to improve, but you will begin to see us test new concepts like that as early as the end of this year, the beginning of next year.

We are actually going to be testing new concepts that actually take into account the ability for people to go in and have interactive play. There's going to be a lot more audiovisual appeal than what our stores do today, and definitely, they're going to be bigger.

The Peripheral Surge

You talked about the trends of Rock Band and Wii Fit. Obviously, one of the biggest trends right now is games shipping out with peripherals -- which was once considered to be the kiss of death. After the NES, it really went down, but it's huge now.

BM: I think, for instance, in a game like Mario Kart, where it's shipping with the wheel, but it's a four-player game. Even though -- Tony's point earlier -- that's where our associates are going to be able to tell that consumer that, "There's a wheel in here, and you can play the game without the wheel, but in order to have the experience, we just want you to be aware that there's one wheel, and if you have other people in the family, you're going to want to buy additional wheels."

TB: I think that, first of all, it's obviously been successful. You just have to look at Guitar Hero, and Rock Band has been wildly successful. I'm very excited about what they just announced... is that the peripherals are going to be interchangeable between Rock Band and Guitar Hero: World Tour. Because I don't think my family can take any more drum sets, especially ones that you can't take apart. I'm really excited about the fact -- that there's no doubt that this works in the short term.

Now, the question is... since they came out, there's been a definite improvement in quality of the instruments, and so forth, that they've had this year. At some point, are you going to reach a saturation point where people are not going to be buying peripherals year after year after year? Could be. How many SKUs do we have that are box sets?

BM: We will have close to 25.

TB: Close to 25 SKUs, going into the holidays, that are different SKUs, that are box sets.

Well, there's, what... three Rock Bands? Three Guitar Heros?  And there's more than one SKU -- there's the guitar SKU, drum SKU...

TB: Precisely.

God, that's complicated.

TB: So there's 25 of those, so the complexity of -- if I were in a big box, I'd be saying, "Thank God that the CD industry is down so much, because where would I put all of this stuff?" But I think that peripherals are obviously selling. But what I think the future is -- probably, it's just frankly a household limit on the amount of peripherals that you can fit in one game room.

But for you guys, how do you balance this? A lot of your stores -- I mean, some of them are quite large, but some of them aren't. So how do you balance stocking and handling these large packages? One Rock Band is 100 copies of a regular game, or something.

BM: That's a good point. It essentially becomes a real difficult challenge going into the second generation of Rock Band, and now Guitar Hero 4, where that will come with drums, so the packaging will get bigger. So the way we're setting it up now, and we're still finalizing it, is that we obviously won't carry the high-end things, like the Ion drum sets, some of the Fender guitars, and so forth.

But still, we want the customer to be able to walk into a GameStop -- this is an initiative that Tony really drove home with us hard from an operations and merchandising perspective. We want them to be able to come in and be able to say, "Hey, I want that Ion drum set." We want to be able to get that delivered to the store in a fairly short period of time. We'll be able to stock it and have it in our distribution centers, and still get it to the customer within a short period of time, without taking up all of the room within our stores.

TB: Those are the unique SKUs, beyond the 25 you're talking about. But for the 25 we're talking about, our proprietary system literally allows us to watch, today, what's selling, where we need product, and today we can also send it out to that store -- so it will be there literally just in time. Since it's all we do, the proprietary system is solely based on video games.

It's going to be a challenge for us, because we can't literally just dump 50 of each SKU into the store, and watch it sell. But we are going to be on top of it literally on an hour-by-hour basis, to make sure that nobody's shorted.