GameStop --Let the Games Begin! Presenting to:
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GameStop --Let the Games Begin! Presenting to: George Sherman, CEO of GameStop Presented by: Nanyang consulting January 2020 Agenda 1 2 3 4 5 6 7 8 Problems Recommendations Analysis Alternatives Implementation Financials Contingency
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01
GameStop --Let the Games Begin! Presenting to: George Sherman, CEO of GameStop
Presented by: Nanyang consulting January 2020<br>
Presented by: Nanyang consulting January 2020<br>
02
Agenda 1
2
3
4
5
6
7
8 Problems
Recommendations
Analysis
Alternatives
Implementation
Financials
Contingency
Conclusion 2<br>
2
3
4
5
6
7
8 Problems
Recommendations
Analysis
Alternatives
Implementation
Financials
Contingency
Conclusion 2<br>
03
Problem Statement: GameStop faces obstacles to survival amidst disruption in the gaming industry 3 GameStop faces obstacles in future growth prospects amidst a highly evolving industry and consumer landscape<br>
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Recommendations : GameStop can dynamically evolve with the industry and consumers to attain exceptional performance 4 GameStop can exploit opportunities in the industry, and internally, to stimulate growth and ensure survival amidst challenges<br>
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External analysis: GameStop operates in a highly evolving, competitive industry that faces disruption 9.6% YoY growth in digital gaming content
Shift to online gaming communities – 27% increase
Introduction of 5G (20-30 gbps)
CAGR 13.4% in console sales
3.8% YoY growth in retail sales
Increasing online shopping – 14.3% of total retail sales 5 Opportunity Disruption – from physical to online
Competition – Brick and mortar and online
Shift in consumer behavior Threat<br>
Shift to online gaming communities – 27% increase
Introduction of 5G (20-30 gbps)
CAGR 13.4% in console sales
3.8% YoY growth in retail sales
Increasing online shopping – 14.3% of total retail sales 5 Opportunity Disruption – from physical to online
Competition – Brick and mortar and online
Shift in consumer behavior Threat<br>
06
Internal analysis: GameStop has a robust retail model with capabilities that need to be exploited to survive Revenue growth – over $ 9 billion
Geographical presence– 5830 locations worldwide
Differentiation – pre-owned segment
Robust marketing program – Powerup rewards, magazine 6 Strength Lack of investor confidence – decreasing stock price
Lack of customer segmentation
Inadequate use of customer data
Decreasing Revenue and Operating Income Weakness<br>
Geographical presence– 5830 locations worldwide
Differentiation – pre-owned segment
Robust marketing program – Powerup rewards, magazine 6 Strength Lack of investor confidence – decreasing stock price
Lack of customer segmentation
Inadequate use of customer data
Decreasing Revenue and Operating Income Weakness<br>
07
Industry Value Chain analysis: Gaming retailers faces threat of disruption and displacement within the industry 7 Offline gaming retailers are threatened by online sellers with deep partnerships with game producers, and customer who prefer online sales Threat of displacement Threat of disintermediation Orogin, UPplay Gamespot, BestBuy<br>
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Industry potential analysis: Gaming industry has potential areas for growth and exploitation 8 GameStop must monetize on community potential, events and influence of YouTube channels<br>
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Industry value analysis: GameStop must focus on potential areas to secure competitive advantage 9 Future potential areas for avoiding disruption – customer analysis and experience and convenience of purchase High Relativity Low Product Variety Customer Experience Price Convenience Customer Understanding GameStop Traditional retailers (Best buy) Online (Origin)<br>
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Customer Persona Analysis: GameStop must target customers across profiles to ensure that it stays ahead in the game 10<br>
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Strategic alternatives have been considered in our analysis 11 Future growth Current operations Diversify Content Provider Mobile game application Online streaming Community hub Business Model revamp Operations and culture strategy<br>
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Implementation (1/3): Community hub creation Utilize available data to gain competitive advantage
Study consumer behavior
Incentivize to join community hubs 12 What Study of consumer behavior – one step ahead of disruption and competition
Building customer loyalty Why GameStop can build customer loyalty by associating with industry emerging trends and creating a stamp in gaming<br>
Study consumer behavior
Incentivize to join community hubs 12 What Study of consumer behavior – one step ahead of disruption and competition
Building customer loyalty Why GameStop can build customer loyalty by associating with industry emerging trends and creating a stamp in gaming<br>
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Implementation (1/3): Enhancing Customer Centricity 13 1. Data Integration Data Analytics is imperative in understanding consumer and market needs, and can be used to target sales and increase revenue exponentially OmniChannel experience<br>
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Implementation (1/3): Enhancing Customer Centricity 14 2. Community Hub Data Analytics is imperative in understanding consumer and market needs, and can be used to target sales and increase revenue exponentially Gamification<br>
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Implementation (1/3): Enhancing Customer Centricity 15 Activity Stream required for the implementation of an enhanced customer centric experience<br>
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Implementation (2/3): Business Model revamp Revise business model
Boost revenue and profitability
Build partnerships and collaboration 16 What Industry dynamics require a shift in business model
Need to secure profitability
Financial security Why Attain profitability and higher revenue growth by increasing footfall at brick and mortar stores and revamping current business model<br>
Boost revenue and profitability
Build partnerships and collaboration 16 What Industry dynamics require a shift in business model
Need to secure profitability
Financial security Why Attain profitability and higher revenue growth by increasing footfall at brick and mortar stores and revamping current business model<br>
17
17 1. Store Arena Increase footfall at stores (malls) by shifting focus from only sales to gaming and conventions Implementation (2/3): Business Model revamp<br>
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18 2. Business Model Implementation (2/3): Business Model revamp Omnichannel subscription model (pre-owned games) – ‘Surprise me’ recommendations
Social media selling
Participation in ‘Game Cons’ (e.g. Gamescom in Cologne, Germany)
Exclusive launch of games at events Focus on the ‘long-tail’ - niche market of the industry, and monetize returns via subscription model<br>
Social media selling
Participation in ‘Game Cons’ (e.g. Gamescom in Cologne, Germany)
Exclusive launch of games at events Focus on the ‘long-tail’ - niche market of the industry, and monetize returns via subscription model<br>
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19 Implementation (2/3): Business Model revamp Activity Stream required for the implementation of a revamped business model – store arenas and omni-channel subscription<br>
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Implementation (3/3): Corporate operations & culture strategy Stabilize and incentivize top management team
Nurture new talents and next generation of leaders
Build a strong corporate culture 20 What Significant turnover in key management results in inconsistency of operations
Improved compensation system enables employee motivation
Coherent corporate culture will reduce turnover rate Why Consistent company culture will allow employees and consumer to resonate with a common vision, and ensure loyalty<br>
Nurture new talents and next generation of leaders
Build a strong corporate culture 20 What Significant turnover in key management results in inconsistency of operations
Improved compensation system enables employee motivation
Coherent corporate culture will reduce turnover rate Why Consistent company culture will allow employees and consumer to resonate with a common vision, and ensure loyalty<br>
21
Implementation (3/3): Corporate operations & culture strategy Offer Employee Stock Options for key employee (top executives, line managers);
Re-design KPIs to tie with company-wide performance;
Launch “Fast track program” to cultivate next generation of leaders;
Actively participate university events and promote 6-month internships;
Recruit talents from gaming conventions, e.g. Gamescom 21 Send employee surveys to understand their views
Promote corporate vision, e.g. “To be the leading gaming experience retailer”
Work-life balance activities, e.g. “Game on Friday”
Constantly track employee satisfaction rate and loyalty rate Culture Operations & HR<br>
Re-design KPIs to tie with company-wide performance;
Launch “Fast track program” to cultivate next generation of leaders;
Actively participate university events and promote 6-month internships;
Recruit talents from gaming conventions, e.g. Gamescom 21 Send employee surveys to understand their views
Promote corporate vision, e.g. “To be the leading gaming experience retailer”
Work-life balance activities, e.g. “Game on Friday”
Constantly track employee satisfaction rate and loyalty rate Culture Operations & HR<br>
22
Timeline for Implementation plans 22<br>
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Timeline for Implementation plans 23<br>
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KPIs: Following KPIs will enable GameStop to secure the success of proposed suggestions Customer centric strategy
1. Conversion rate from recommendation to sales
2. Customer net promoter indicator
Business model revamp strategy
1. Increase in physical store visits
2. Number of store arenas
Corporate operation & culture strategy
1. Employee turnover rate
2. Employee satisfaction rate 24 KPI Customer centric strategy
1. 40%
2. 75%
Business model revamp strategy
1. More than 20%
2. 300 (progressively achieved)
Corporate operation & culture strategy
1. Less than 5%, especially for top executives
2. 90% Target<br>
1. Conversion rate from recommendation to sales
2. Customer net promoter indicator
Business model revamp strategy
1. Increase in physical store visits
2. Number of store arenas
Corporate operation & culture strategy
1. Employee turnover rate
2. Employee satisfaction rate 24 KPI Customer centric strategy
1. 40%
2. 75%
Business model revamp strategy
1. More than 20%
2. 300 (progressively achieved)
Corporate operation & culture strategy
1. Less than 5%, especially for top executives
2. 90% Target<br>
25
Contingency plan: Mitigating Controls to address foreseeable risks of the implementation plan Customer centric strategy
Inaccurate recommendation system
Less signups for community hub
Business model revamp strategy
Unsuccessful opening of store arenas
Rejection of omnichannel model
Closure of malls
Corporate operation & culture strategy
Resistance to new vision
Insufficient knowledge of new recruits 25 Risk Customer centric strategy
Collect more customer data – better profiling algorithm
Increase marketing for community benefits
Business model revamp strategy
Re-evaluate arena offering
Increase pre-owned shelf space
Reevaluation of stores to predict closure
Corporate operation & culture strategy
Identify vision ambassador and realign KPIs
Implement training programs Mitigation<br>
Inaccurate recommendation system
Less signups for community hub
Business model revamp strategy
Unsuccessful opening of store arenas
Rejection of omnichannel model
Closure of malls
Corporate operation & culture strategy
Resistance to new vision
Insufficient knowledge of new recruits 25 Risk Customer centric strategy
Collect more customer data – better profiling algorithm
Increase marketing for community benefits
Business model revamp strategy
Re-evaluate arena offering
Increase pre-owned shelf space
Reevaluation of stores to predict closure
Corporate operation & culture strategy
Identify vision ambassador and realign KPIs
Implement training programs Mitigation<br>
26
Financial analysis: Proposed strategies will enable GameStop to increase revenue by 38% in 5 years! 26 Proposed strategies will enable GameStop to achieve stronger financial results, especially revenue.<br>
27
Financial analysis: The following cost is associated with suggested strategies. 27 Profitability will increase profit significantly, while necessary investment and cost will incur to support the implementation process.<br>
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Conclusion : GameStop can dynamically evolve with the industry and consumers to attain exceptional performance 28 GameStop can exploit opportunities in the industry, and internally to stimulate growth and ensure survival amidst challenges<br>
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THANK YOU FOR YOUR ATTENTION We now welcome any question you may have. January 2020<br>