One on One with Gamestop COO J. Paul Raines
Friday, March 06, 2009
|
|
|
|
SUSIE GHARIB: GameStop is at the top of its game, but now the retailer is getting some stiff competition. Amazon.com is offering customers store credit when they trade in used video games. That's a key segment of GameStop's business. That could break GameStop's winning streak. Its sales and profits are surging, while other retailers have been beaten down by the recession. As we continue our series, "Reviving the Economy: What Should Business Do," I'm joined by Gamestop's chief operating officer J. Paul Raines. Mr. Raines welcome to NIGHTLY BUSINESS REPORT.
J. PAUL RAINES, CHIEF OPERATING OFFICER, GAMESTOP: Thank you, it's great to be here with you.
GHARIB: All right buying and selling used video games is a big part of your business, but what is your strategy now that Amazon is jumping into the game?
RAINES: It's interesting. We certainly follow all of our competitors closely. But we spend a great deal of time on this used business and understand it very deeply. Seventy to 80 percent of the trade credits we provide customers go right back into a new title that the customer purchases. So we see our used business really as the trade currency for selling new titles. So the immediacy of having availability of a new title is very important to customers. So we tested a trade model of this type that our competitors are testing now and we found that customers really, our customers didn't want to wait to get credit and they wanted to have that immediate trade currency to put back into a new game title. So for us it's really more about the immediacy of that consumer and really staying focused on providing trade currency for new game sales. So our strategy is to continue to focus on our approach.
GHARIB: Speaking of the consumer, we see that the consumers have become really stingy about spending money these days. But it somehow seems like they have money to buy video games. Is your business recession proof?
RAINES: Well Susie, we certainly our business us recession resistant. If you start with the fact that video games are a great value, you know, a video game provides 80 hours of game play and on a per dollar basis, it provides far more family entertainment than perhaps a night at the movies or going out to eat. So we think it's a great value. Our associates in our stores provide great service because we are video game specialists. So we're able to counsel customers on what kind of games they're interested in. Of course the buy/sell/trade model provides a great currency for customers who are looking to trade games to buy new titles.
GHARIB: In a few days, you're going to be reporting your year end results and from what I hear, sales are expected to be up something like 22 percent. Profits are going to be up by 33 percent. Those are amazing numbers in this environment. Do you have any tips or any advice for other retailers or other businesses on how to make money in a tough economy?
RAINES: Susie, it's certainly a tough economy out there for everyone and retailers are no exception. We believe that it's important to focus on the consumer and understand what the consumer is looking for. In our business, we want to provide the broadest assortment possible for the customers. We want to provide great service for them and offer options of price points of all kinds. And we have been fortunate that, because we are a dedicated specialist in the category, we've enjoyed the expansion of video gaming. We've seen that over half of new buyers playing video games today and buying games today are over 35 and 40 percent are female. So the video game category is really expanding and the entertainment dollars coming into it are growing. We think it's important to understand those consumers and stay focused on their needs.
GHARIB: We just have about 30 seconds left and I want to ask you. I understand that you're going to be opening 400 stores worldwide. That sounds pretty bold in this economy. Can you tell us quickly what your thinking is on that?
RAINES: We plan to open about 200 stores in the United States and 200 internationally. As you may know, we operate in 17 countries. We just completed a major acquisition in France. So we continue to see vitality in the United States and overseas for the category. So where it makes sense and where the returns are there, we continue to plan to invest and open stores.
GHARIB: All right. Good luck to you and thank you so much for coming on our program.
RAINES: Thank you, Susie.
GHARIB: My guest tonight J. Paul Raines of GameStop.
