GameStop Future Strategy Presentation Highlights
GameStop's upper management received a detailed presentation on the future strategy crafted by George Sherman & team. The presentation covered key areas such as store traffic, sales, margins, profitability, and stock price. It outlined the need for enhancing the in-store experience, expanding e-commerce, organizing more in-store events, and focusing on customer experience for increased sales and profitability. The analysis also highlighted important market criteria to be considered, including SWOT factors, customer base loyalty, marketing strategies, and market competitiveness. The strategy aims to make GameStop more attractive to online distributors and adaptable to changing market trends.
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Presentation Transcript
The future of GameStop Creation of GameStop Experience George Sherman & Team presenting to the upper management
Agenda Carolin Theresa George Robin Carolin I II III IV V Management Summary Analysis Implementation Finance Next Steps 2
Management Summary 3
Key Issues IV. Store traffic I. Sales V. Store sales II. Margins III. Profits VI. Stock price Analysis Implementation Finance Next steps Management Summary 4
Key Issues IV. Store traffic I. Sales What change in business model does GameStop needs to stay competitive in the future? V. Store sales II. Margins III. Profits VI. Stock price 5
Management Summary Creation of an in-store experience world Expansion of e-commerce Increase of in-store events Strategy Increase of sales due to the creation of customer experience Increase profitability Getting attractive for online distributers Outcome Analysis Implementation Finance Next steps Management Summary 6
Analysis 7
Looking at the market reveals some important criteria to be considered in the future S W O T tournaments Lack of Big Data Loyal customer base Missed trend of Purchase and re-sell of digitalization games Robust marketing program Online and offline presence Highly competitive market Changing target customer Sony s prohibition of Partnering with digital download codes distribution platforms Close-down of malls and Demand of in-person physical mediums Management Summary Implementation Finance Next steps Analysis 8
Looking at the market reveals some important criteria to be considered in the future S W O T Lack of Big Data Loyal customer base Missed trend of Purchase and re-sell of digitalization games Robust marketing program Online and offline presence Highly competitive market Changing target customer Partnering with digital Sony s prohibition of download codes distribution platforms Close-down of malls and Demand of in-person physical mediums tournaments Management Summary Implementation Finance Next steps Analysis 9
Looking at the market reveals some important criteria to be considered in the future S W O T tournaments Lack of Big Data Loyal customer base Missed trend of Purchase and re-sell of digitalization games Robust marketing program Online and offline presence Highly competitive market Changing target customer Sony s prohibition of Partnering with digital download codes distribution platforms Close-down of malls and Demand of in-person physical mediums Management Summary Implementation Finance Next steps Analysis 10
A changing target customer base is a opportunity GameStop should focus on Achim Sam 31 years old Wants to escape the real world Wants to have some family experiences 16 years old Only interested in gaming Management Summary Implementation Finance Next steps Analysis 11
A changing target customer base is a opportunity GameStop should focus on Focus on the changing customer base and therefore, on the changing customer wants. Customer experience! Achim Sam 31 years old Wants to escape the real world Wants to have some family experiences 16 years old Only interested in gaming Management Summary Analysis Implementation Finance Next steps 12
Looking at the market reveals some important criteria to be considered in the future S W O T tournaments Lack of Big Data Loyal customer base Missed trend of Purchase and re-sell of digitalization games Robust marketing program Online and offline presence Highly competitive market Changing target customer Sony s prohibition of Partnering with digital download codes distribution platforms Close-down of malls and Demand of in-person physical mediums Management Summary Implementation Finance Next steps Analysis 13
GameStop faces a highly competitive market Offline Online Best Buy Target Origin Uplay Walmart Kmart Steam Management Summary Implementation Finance Next steps Analysis 14
GameStop faces a highly competitive market Offline Online Not able to compete with competitors in their business. Create a unique selling point to outstand the highly competitive market. Best Buy Target Origin Uplay Walmart Kmart Steam Management Summary Analysis Implementation Finance Next steps 15
Looking at the market reveals some important criteria to be considered in the future Focus on customer Overcome the lack of Big experience and use the Data and get in touch with strengths of the loyal customers to gain insights. customer base Overcome the threats of Take advantage of the competition and the interest in in-person development of mall closing tournaments and digital distribution platforms Management Summary Implementation Finance Next steps Analysis 16
Looking ahead what can we do? GameStop Experience Sell Merge Acquire Downsize Fulfilling customer needs Getting new knowledge Share of knowledge Cost savings Increase market share Declining KPIs Focus on core competencies Overcoming competition Focus Exit strategy Produce own content Less presence Becoming attractive to partners Loss of identity Not feasible Management Summary Implementation Finance Next steps Analysis 17
Alternatives GameStop Experience Sell Merge Acquire Downsize Market fit & future potential Feasability Fulfill customer needs of loyal customer base Financial impact Management Summary Implementation Finance Next steps Analysis 18
Alternatives GameStop Experience Sell Merge Acquire Downsize Market fit & future potential Feasability Fulfill customer needs of loyal customer base Financial impact Management Summary Implementation Finance Next steps Analysis 19
Recommendation GameStop Experience Sell Merge Acquire Downsize Built up flagship stores as GameStop Market fit & future potential Experience to create ultimate shopping experience in order to fulfill customer needs. Feasability Fulfill customer needs of loyal customer base Financial impact Management Summary Analysis Implementation Finance Next steps 20
In order to improve customer experience we have to change our strategy Necessary change of business model Online distribution partner GameStop Experience Impact on stores Game distribution is online, but experience is stationary. Management Summary Analysis Finance Next steps Implementation
Stores have to be redesigned in order to improve customer experience Necessary change of stores Online distribution partner GameStop Experience Impact on stores Old New flagship stores 1,700 square feet 3,000 square feet Average size 3 full-time 5 part-time Pre-owned, new and digital software Hardware Accessories and collectables Assortment focused 8 full-time 2 part-time Pre-owned, new and digital software (partnering) Hardware Accessories and collectables Theme and event focused Average number of employees Assortment In-store design Management Summary Analysis Finance Next steps Implementation
To improve customer experience we have to change our entire store set-up Necessary change of stores Online distribution partner GameStop Experience Impact on stores In-house events (tournaments, LAN- parties, test gaming) Establish theme worlds within store Pre-owned game auctions Nostalgic games Management Summary Analysis Finance Next steps Implementation
We will reduce our number of stores and employees tremendously Necessary change of business model Online distribution partner GameStop Experience Impact on stores Number of employees Number of stores 16k full time 4k part-time 16k full-time 23-45k part-time 2,000 5,830 Management Summary Analysis Finance Next steps Implementation
Online distribution will be outsourced to partners Necessary change of business model Online distribution partner GameStop Experience Impact on stores We will outsource our digital distribution channel to an online distribution retailer Potential partners are Steam (main target), Origin or Uplay Therefore, GameStops flagship stores are highly attractive to partners Management Summary Analysis Finance Next steps Implementation
Timeline 2020 2021 2022 2023 2024 2025 Impact Store redesign concept Restructuring and new store opening Employee education program Store close down 2k 3k Opex down Partnering Marketing Management Summary Analysis Finance Next steps Implementation
Finance 28
KPIs Key assumptions Key outcomes Required total investment until 2025 1.3B$ Financing through own capital Break-even in 2023 Net profit in 2025 558M$ 700M$ Revenue share from partnering in 2025 20% Comission rate Financing through sponsoring 600M$ Number of stores in 2025 2000 4% Management Summary Analysis Implementation Next steps Finance
Revenue streams and net result development In M$ Net results in M$ 3000 700 600 2500 500 2000 400 1500 300 200 1000 100 500 0 0 2020 2021 2022 2023 2024 2025 -100 1 2 3 4 5 6 New video game hardware Pre-owned and value video game products Digital Partnering comission New video game software Video game accessoires Collectibles Partnering fees -200 -300 -400 Management Summary Analysis Implementation Next steps Finance
Risks and mitigation Risks Mitigation Financing through own capital Net profit in 2025 558M$ No partners can be attracted for the new experience model Start business model based on sponsoring 700M$ Financing through sponsoring 600M$ Number of stores in 2025 2000 Highly passionate and loyal customer base that is locked-in through unique pre-owned game trade Customers are not attracted Management Summary Analysis Implementation Next steps Finance
Next Steps 32
Monday morning actions Employee education program Start of partnering negotiations Store concept redesign Management Summary Analysis Implementation Finance Next steps 33
Thank you for your attention. Please feel free to ask any questions now! 34
Appendix 35
Investment structure Investments in M$ 2020 2021 2022 2023 2024 2025 Store re-design and build-up 200 100 50 20 20 20 Store close-down 20 20 0 0 0 0 Data analytics competencies 20 10 5 5 5 5 Marketing campaign 300 200 100 100 100
Business plan 2020 8000 6000 2000 25% 2200 100 -300 -4% 20 -320 -4% 2021 8080 5979 2101 26% 2200 50 -149 -2% 25 -174 -2% 2022 8322 6075 2247 27% 2150 2023 8655 6232 2423 28% 2100 50 273 3% 112 161 2% 2024 9088 6453 2636 29% 2000 50 586 6% 206 380 4% 2025 9633 6743 2890 30% 2000 50 840 9% 282 558 6% Revenue Operational costs Gross profit Gross margin Selling, general and administrative expenses Depreciation, Amortization EBIT EBIT margin Tax expenses (Tax rate 30%) Net result Net margin 50 47 1% 76 -29 0%
Revenue streams Revenue streams New video game hardware in % New video game software in % Pre-owned and value video game products in % Video game accessoires in % Digital in % Collectibles in % Partnering comission in % Partnering fees in % 2020 1600 20% 2368 30% 1920 24% 1040 13% 240 3% 800 10% 2021 1454 18% 2101 26% 1939 24% 1050 13% 162 2% 889 11% 242 3% 242 3% 2022 1332 16% 1831 22% 2081 25% 1248 15% 166 2% 999 12% 416 5% 250 3% 2023 1212 14% 1385 16% 2164 25% 1558 18% 87 1% 1125 13% 866 10% 260 3% 2024 1091 12% 1091 12% 2272 25% 1818 20% 91 1% 1272 14% 1181 13% 273 3% 2025 963 10% 963 10% 2408 25% 1927 20% 96 1% 1445 15% 1541 16% 289 3% 0 0% 0 0%
