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GameStop in 2008: The Mega-Interview


September 19, 2008 Article Start Previous Page 8 of 8
 

The Other Side of GameStop: The International Push

One thing I do want to touch on before we leave is your international stores. There has been some expansion. I spoke to Chris earlier this year, when you'd just moved into some Scandinavian territories.

TB: We'll, we'd been there. I worked with international finance as well. We actually just had a meeting with all of our people. We'd actually been in all of the four Scandinavian countries, but we did actually make two acquisitions -- one last year, one earlier last year.

Free Record shop was converted, now, to GameStops, and those have been outstanding. We've converted 36 of those in Norway and I think 13 of them in Finland, I believe. What it's essentially allowed us to do -- we did have one other competitor there, in the specialty retail, which is GAME, who I don't think has developed a store in the last three years. So essentially it's allowed us to move our number of stores in the Nordic region up to 170 stores. So we feel very comfortable about our market share position there.

And I believe Australia is another place where things have recently been moving forward?

TB: Actually, we're moving forward in all... over 50% of the amount of development we do this year will be international. So Australia is going to continue to develop at a very quick pace, and in fact, they just made a very small acquisition in New Zealand called Gamesman that essentially solidifies us as the sole specialty retail player in New Zealand at this point.

We're always going to be on the lookout for acquisition opportunities to either get into territories where we aren't in today, but more importantly we want to continue to grow at a very aggressive pace. I like what our executive chairman says:  "We're not a growth company. We're a hyper-growth company." And in order to do that, you need to continue to look at opportunities. When you look at development, I think we can continue the pace of development that we're on for, my God, much longer than I can predict the cycle of video games for.

You don't think there's any vulnerability in growing too fast, though, potentially?

TB: Well, yes, I do think there's vulnerability in growing too fast. But I don't think that we're growing too fast. I think that when you look at the performance of our stores -- especially our new stores -- each year we go back and track how each of our stores do against their expectations. Each year for the last five years we've seen an increase in the amount of stores.

The beauty of what has happened with the acquisition of EB Games, is if you looked at what was happening, we were both growing at about, it seems like, 300 stores per year. But it was a lot of head-to-head competition. But what it allowed us to do with the acquisition was to really now step back and say, "Okay, we're still going to do 300 stores in the U.S., but we're going to cherry pick and do the best stores that we need to have."

I think, at that point, we were more at risk when we were two separate companies, because we were basically putting two gaming stores down in the exact same area. This has allowed us now to really cherry pick. We look at the cannibalization that we do to stores on every store that we open, and we are very mindful of where we set that down, and we're seeing almost no cannibalization. I think that it's really a tribute. I think that we shut down 70 stores, in total, after the acquisition, which is just an amazing feat.

Has there been any adverse reaction? At this point, EB Games has been wholly brought into the GameStop family.

TB: In the U.S.

Right. Things are moving toward a homogenization. Has there been any adverse reaction?

TB: You know, it's fascinating. Now you'll talk -- Bob and I sat down and had lunch with the store managers, and they were talking about, "Oh yeah, my GameStop with the yellow counters." That's the way they talk about it now. There really isn't a brand [issue]. There's been so much change -- in fact, I can't tell you if the regional managers, the district managers -- we have not talked to anyone, I have not heard anyone say, "I'm ex-EB" for a year and a half. [Ed. note: EB Games' final color scheme as a separate entity was stores with yellow counters and shelving.]

BM: Yes, I would say so.

TB: Two years ago at this conference in Dallas, we kind of declared, "It's over, let's move forward, we're one company." Last year it was solidified. We're moving forward.

BM: I think that a year ago when we revealed the GameStop: Power to the Players as the brand initiative, those people, really again, the passionate army, they wanted a rallying cry to leave here with and we gave it to them, and it was really important to their identity as well.

TB: And we told them we wouldn't change it, and we didn't, and we're going to keep moving.

---

Title photos by Stephan Mosel and Dicoplio Family, used under Creative Commons license


Article Start Previous Page 8 of 8

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