Revitalizing GameStop: Navigating Change for a Bright Future
This strategic analysis delves into GameStop's current challenges and opportunities, proposing a revitalization strategy focused on leveraging strengths such as a large user base and strong marketing. The recommendations include tapping into the online market, addressing the decline in physical sales, and implementing a new business model and marketing strategy. By adapting to the changing gaming landscape, GameStop can overcome threats and position itself for sustained growth.
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GAMESTOP: A NEW LEASE OF LIFE, OR GAME OVER? TECHNOLOGICAL UNIVERSITY DUBLIN S J M P CONSULTANCY
DEAN MURPHY FINANCE JANE MAHER MARKETING GRAEME PHELAN OPERATIONS SARAHJANE MCGIGAN GROWTH TECHNOLOGICAL UNIVERSITY DUBLIN S J M P CONSULTANCY
How to take the business from the present with a model from the past into a future that is bright? CHALLENGE STATEMENT
6 5 4 3 2 1 0 ANALYSIS
SWOT Strengths Weaknesses Opportunities Threats Declining physical new game market 39.6M members Online market growth Game industry moving online $1.6 Billion cash Large user base Profit position* Competitors Strong marketing Pre- owned Store traffic & sales Decisive CEO Console market Lack of nuanced engagement Stock price decline New Mgnt restructure Strong marketing potential Game manufacturers Large staff contingent Strong Pre-owned market Leasehold expirations Key takeaway: Members, Marketing and Online. ANALYSIS RECOMMENDATION IMPLEMENTATION EVALUATION
TOWS Strengths Weaknesses 39.6 million members Strong marketing Declining physical market Store traffic & sales Opportunities Online opportunity exists with large user base Opportunity to grow pre-owned as new consoles backward compatible Addressing the declining physical market with potential to capture online growth While store traffic down, pre- owned sales are up Not addressing threat of online or decline of physical Lack of user segmentation Online Market Growth Pre-owned Threats Threat from declining physical sales but strong user base Use strength in marketing to tap into users online Game industry moving online Lack of nuanced user engagement Key takeaway: Utilize marketing strength and address declining physical market ANALYSIS RECOMMENDATION IMPLEMENTATION EVALUATION
Where do we want to be? Where are we now? What will we deliver? Good cash position Reversing declining sales & growing pre- sold market Business model Marketing strategy Strong member based but unsegmented Tapping potential of large member base Key takeaway: Deliver new business model AND a new marketing strategy ANALYSIS RECOMMENDATION IMPLEMENTATION EVALUATION
LIST OF ISSUES PRIORITIZATION OF ISSUES URGENCY 1. Store traffic decline 3. 1. 2. 2. New game physical sales decline 3. 39.6 million users unsegmented 8. 7. 5. 10 4. Profit position IMPORTANCE 9. 4. 5. Stock price 6. 6. Industry manufacturers blocking sales 7. Large no. of staff and brick & mortar stores 8. Industry evolving 9. Leasehold expiration 10. User mindset shifted away from visiting stores ANALYSIS RECOMMENDATION IMPLEMENTATION EVALUATION
ISSUES THEMED Marketing Business model Planning ANALYSIS RECOMMENDATION IMPLEMENTATION EVALUATION
RECOMMENDATION ONE: WHAT: Address current business model issue Key statistics 8.5% Gross Profit (GP) on hardware 88.5% GP Digital Consoles CAGR 13.4% fastest growing Online shopping 14.3% total retail $517B, growing 15% Key takeaway: Need to play to strengths while also mitigating against risks changing buyer behavior & demographics ANALYSIS RECOMMENDATION IMPLEMENTATION EVALUATION
Option 1 Option 2 Option 3 Move to fully ecommerce business model Blended online bricks & mortar with new marketing strategy Tackle esport market by copying mixer/ twitch model Cost saving Cost saving Cost incurring High risk Medium risk Cost saving ANALYSIS RECOMMENDATION IMPLEMENTATION EVALUATION
RECOMMENDATION ONE: WHAT: Address current business model issue Option evaluation Cost ROI Internal capabilities Acceptable to stakeholders Low Recommended Option 1 High Medium high High NO Comment Breaking lease Compete with Amazon High Strong new team Abrupt job loss Brand perception stops rev stream YES Option 2 Low High High Comment Natural break in leases High Maximizing strengths Unknown Strong new team Good comm/ PR strategy Unknown Option 3 Low NO Comment High competition New world Not strength new team Not current target customer Doesn t align with existing capabilities Key takeaway: Phased repositioning most strategically acceptable & viable ANALYSIS RECOMMENDATION IMPLEMENTATION EVALUATION
RECOMMENDATION ONE: WHAT: Address current business model issue Strategy on a page Vision; To be a market leader of the gaming industry 2.0 What: blended business model transitioning to a digital first e-commerce driven model Features Rationale risks KPIs Key flagship Website SEO traffic Establish ourselves No. 1 for pre-owned High comp Centralized distribution Increase in ecomm Understand segment Website redesign Revenue distribution split. Brand Reputation New consoles Reduces overheads Redeployment workers Key takeaway: Need to play to strengths while also mitigating against risks changing buyer behavior & demographics ANALYSIS RECOMMENDATION IMPLEMENTATION EVALUATION
RECOMMENDATION ONE: Address current business model issue 1 Billion USD over 3 years Year 1 1. Agree & sign off on phased shop closures 2019-2023 2. Identify locations for flagship stores 3. Assign budget, redesign and reagree new 5 year lease for flagships 4. Identify locations disruption centers 5. Communication plan & redundancy agreements full time staff 6. Negotiate contracts redeployed staff distribution centers 7. Creative rebrand & website 8. Marketing campaign established Redundancy budget: 640 million Refit: 200 million over 3 years Dist. Centers 20 over 3 years: 200 million ANALYSIS RECOMMENDATION IMPLEMENTATION EVALUATION
RECOMMENDATION ONE: Address current business model issue Phased over 3 years to 2023 Year 2 1. Phased store closures 2. Flagship store rebuild 3. Flagship store launch 4. Distribution warehouses built 5. Distribution warehouses launched ANALYSIS RECOMMENDATION IMPLEMENTATION EVALUATION
RECOMMENDATION ONE BUSINESS MODEL Year 3 Final closure non flagship stores Phase 2 warehouse build Strategic partnership eSport Est 5 year strategy Redesign team ANALYSIS RECOMMENDATION IMPLEMENTATION EVALUATION
RECOMMENDATION TWO Unsegmented customer base GameStop 2.0 will need to reposition themselves. Option 1 Option 2 Option 3. ATL (above the line) campaign to target bricks & mortar stores. Purely digital marketing campaign to target current customer base and reposition our brand. Combination of both ATL and online marketing to reach entire audience. Option 1. ATL ROI Low IMPACT Medium COST High 2. Digital High High Medium 3. Combination Low Low High ANALYSIS RECOMMENDATION IMPLEMENTATION EVALUATION
RECOMMENDATION TWO Develop clearly defined, targeted marketing strategy to reposition aligned to our business model in Recommendation One. ANALYSIS RECOMMENDATION IMPLEMENTATION EVALUATION
STRATEGY ON A PAGE VISION To be a market leader of the Game Industry 2.0 CHALLENGE Our consumer profile has shifted and has become more fragmented. WHAT? 1. Build a community. 2. Build advocacy for our brand, product & services HOW? ADVOCACY MODEL 1% 9% 90% Leading gamers in the world. Have major influence on our target. Those actively engaged in the current gaming community Those who engage in content. Those still to be brought in to the GameStop brand. Mass ANALYSIS ANALYSIS RECOMMENDATION RECOMMENDATION IMPLEMENTATION EVALUATION EVALUATION
CUSTOMER SEGMENTATION Who? Why? SEGMENT ONE 25-35 year old's male & female Average participant age is 31 years old This market size is estimated to be $18Bn USD/year. 25-35 YO SEGMENT TWO Gen Alpha (influence on our buyers) Most engaged online audience across segments Determine how and why segment one purchase Gen Alpha Locations Canada Australia New Zealand Austria Denmark Finland Germany Ireland Italy Sweden Switzerland Target Customer & Audience ANALYSIS ANALYSIS RECOMMENDATION RECOMMENDATION IMPLEMENTATION EVALUATION EVALUATION
RECOMMENDATION TWO Develop clearly defined, targeted marketing strategy to reposition in line with our business model in Recommendation One. Year One 0-6 months Market research to determine who our 1% advocacy segment is. Create customer journey map to establish our high-impact channels. Assess & develop a advocacy program strategy & budget with a view to implementing in H2 of Y1. Develop creative aimed at our target customer. Be emotive! cost $1M $7M Year One 6-12 months Test creative with our target and ensure it is effective. Based on customer journey mapping back end to aligned with what is most effective Implement advocacy programs impact with our 9% and 90% Digital campaign launch. *see media plan TOTAL (10% of profit had you not impaired goodwill.) cost $2M $16M $26M ANALYSIS RECOMMENDATION IMPLEMENTATION EVALUATION
PROPOSED MEDIA PLAN CHANNELS Q1 Q2 Q3 Q4 YouTube Amazon Prime Facebook Instagram TikTok Twitter PowerUp Rewards has 39.6 million members & 16.2 million members have purchased at GameStop Game Informer Magazine audience can be leveraged as it is the 5th largest consumer publication in the US. Twitter has 95% engagement Facebook has 6.8M likes IG has 1.3M followers ANALYSIS RECOMMENDATION IMPLEMENTATION EVALUATION
RECOMMENDATION ONE Develop clearly defined, targeted marketing strategy to reposition in line with our business model in Recommendation One. Google Analytics Website Redesign THINGS WE MUST DO ON MONDAY MORNING Pardot Data Analytics Heap ANALYSIS RECOMMENDATION IMPLEMENTATION EVALUATION
ROI WORST BEST BASE Business as usual 10% YoY increase 25% YoY Reduction of 135$ YOY $400M over 3 years increase $951M in 3 years Marketing $26M with 36x ROI ANALYSIS RECOMMENDATION IMPLEMENTATION EVALUATION
RISKS & CONTINGENCIES RISKS LIKELIHOOD IMPACT CONTINGENCY 1. Pre-owned continues to decline (17% YOY) 2 5 Omni-channel 2. 4 4 Strong communication Brand Values Redeploy/Reskill A/B Testing Clear metrics Multiple campaigns Backlash to store closures 3. 2 5 Missing segmentation of our target customer 4. Competitor infiltration 4 2 Focusing niche Pre-owned ANALYSIS RECOMMENDATION IMPLEMENTATION EVALUATION
THANK YOU TECHNOLOGICAL UNIVERSITY DUBLIN S J M P CONSULTANCY
