GameStop's Turnaround Strategy and E-sports Expansion
GameStop is seeking a successful turnaround strategy to become an industry leader. Their preferred solution involves introducing a new E-sports league, GameNOW, to revolutionize the retail experience and engage gamers online.
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Presentation Transcript
GameStop: GameNOW Presented to: George Sherman, CEO of GameStop Presented by: DeGroote Consulting, McMaster Nicole, Annette, Alex & Stephanie 1
problem statement What strategy should GameStop employ to spark a successful turnaround and position itself as an industry leader? 2
preferred solution Introducing GameStop s new E-sports league, GameNOW Fundamentally changing GameStop s retail experience. Supported by an online portal for gamers and consumers alike. 3
key issues - importance + Financial performance Profitability Revenue streams 1 1 - urgency + 2 Market trends In-store foot traffic Consumption behavior 3 2 Human capital Leadership turnover C-suite average age Team dynamics 3 5 key issues analysis preferred solution implementation alternatives appendices key success factors risks & contingencies
analysis 6
company analysis Sales declining Retail traffic declining Lack of big data analytics Slow responsiveness Lack of customer segmentation, customization capability Retail industry experience Engaged online customer base Robust marketing program History of strategic agility Proven adaptability STRENGTHS WEAKNESSES Shift in industry structure Emerging competitors Changing retail landscape New digital first economy Emerging trends (i.e., E-sports) Explosion of online streaming sites OPPORTUNITIES THREATS 7 key issues analysis preferred solution implementation alternatives appendices key success factors risks & contingencies
industry analysis E-SPORTS THE FUTURE OF RETAIL CONTENT CONSUMPTION The next BIG thing!! $1.1 billion USD industry, 27% increase from 2017 Fosters community building Less in store purchases Consumers demanding experiential shopping opportunities Streaming Disks Downloads of games 8 key issues analysis preferred solution implementation alternatives appendices key success factors risks & contingencies
competitive analysis Walmart GameStop Gamefly* Amazon* Steam Origin Locations/Users Target LEGEND Best Buy Brick & Mortar Download Sites U Play Other Competitors K-mart Annual Revenues *Not positioned according to revenues & users 9 key issues analysis preferred solution implementation alternatives appendices key success factors risks & contingencies
financial analysis Projected Revenue 8.55 8.23 7.97 7.90 3.1% decrease in revenue from 2017-2019 Decline in pre-owned video game products and hardware revenue streams 7.47 6.95 2016 2017 2018 2019E 2020E 2023E 10 key issues analysis preferred solution implementation alternatives appendices key success factors risks & contingencies
retail space analysis Retail Space Closures 1,216 25% of American malls will close in the next 5 years* 92% of GameStop s retail outlets are located in traditional retail malls Online shopping is valued at $517 billion USD in the US, growing at a 15% CAGR 631 304 158 2019 2020 # of US store leases expiring # of expected US retails malls closing *Credit - Suisse 2019 report 11 key issues analysis preferred solution implementation alternatives appendices key success factors risks & contingencies
alternatives 12
alternatives 1 Merge with online competitor 2 International expansion through acquisition 3 Pivot & DISRUPT 13 key issues analysis preferred solution implementation alternatives appendices key success factors risks & contingencies
Merge with online competitor Identify online competitor with whom GameStop could merge with 1 benefits key criteria Increase in pool of resources & expertise Increase online exposure May result in increased profitability in the long run ? Financial performance Market trends considerations Challenges with finding interested parties in the past Loss of power of strategic direction X Human capital 14 key issues analysis preferred solution implementation alternatives appendices key success factors risks & contingencies
International expansion through acquisition Expand the GameStop brand into the Asian market; potentially divest from American retail market 2 benefits key criteria Broader market and brand visibility Potential for increased revenues Capture growing Asian gaming market ? Financial performance ? Market trends considerations Capital investment Does not address changing market trends Cultural risk Currency risk X Human capital 15 key issues analysis preferred solution implementation alternatives appendices key success factors risks & contingencies
Pivot & DISRUPT Change the fundamental experience of physical retail locations & invest in analytics to optimize online success 3 benefits key criteria Keep up with shifting industry trends Additional revenue streams Leverage human capital expertise Necessary pivot to survive Financial performance Market trends considerations Financial costs & capital Management buy-in Change management Human capital 16 key issues analysis preferred solution implementation alternatives appendices key success factors risks & contingencies
decision matrix International expansion through acquisition 3 Merge with online competitor key criteria weight Pivot & DISRUPT 3 4 Financial performance 0.4 Market trends 0.3 4 3 5 Human capital 0.3 1 1 3 TOTAL 1.0 2.7 2.4 4.0 5 1 High Low 17 key issues analysis preferred solution implementation alternatives appendices key success factors risks & contingencies
preferred solution: GameNOW E-Sports League Introducing GameStop s new E-sports league, GameNOW Fundamentally changing GameStop s retail experience. Supported by an online portal for gamers and consumers alike. 19 key issues analysis preferred solution implementation alternatives appendices key success factors risks & contingencies
preferred solution: GameNOW E-Sports League GAMESTOP S TRIPLE ESTRATEGY Sept 2019 Jan 2020 Jan 2021 Sept 2021 Sept 2020 EVOLVE Create GameNOW E-Sports League EVALUATE In store product invest/divest decisions Marketing initiatives EMPOWER Acquire talent Leadership grip, culture & change management 20 key issues analysis preferred solution implementation alternatives appendices key success factors risks & contingencies
EVOLVE. Creation of E-Sports league GameNOW 1 Sept 2019 Dec 2020 timeline ACTION OWNER KEY ISSUE TRACKER League design, logistics, portal tech development (i.e., selection of games, rules, back end processes) Regional analysis Financial performance Mr. Homeister, Chief Merchandising Officer & COO* Market trends Mr. Homeister, Chief Merchandising Officer Licenses & partnerships Liaise with governing body Human capital Redesign select store layouts to host experiential gatherings Mr. Homeister, Chief Merchandising Officer & COO* 22 key issues analysis preferred solution implementation alternatives appendices key success factors risks & contingencies
phase 1 costs initiative cost League design & logistic $2,000,000 Portal tech development $500,000 R&D $500,000 Licenses & partnerships $1,000,000 Store layout redesign $400,000 TOTAL $4,400,000 23 key issues analysis preferred solution implementation alternatives appendices key success factors risks & contingencies
EVALUATE. Analyze internal infrastructure and product mx & identify opportunities for Big Data usage 2 Jan 2020 Sept 2021 timeline ACTION OWNER KEY ISSUE TRACKER Marketing strategy plan Buzz for league Appearance from gamers Viewing parties Financial performance Marketing Team Market trends Big Data software Targeted marketing campaigns Invest & divest decision Product mix analysis Marketing Lead Human capital Inventory storage & distribution Online sales IT Lead & Merchandising James Bell, CFO (Expertise in omni-channel digital transformation) Website revamp Visual purchasing Action & excitement 24 key issues analysis preferred solution implementation alternatives appendices key success factors risks & contingencies
phase 2 costs initiative cost League marketing $500,000 Website revamp $50,-00 Software $740,000 TOTAL $1,300,000 25 key issues analysis preferred solution implementation alternatives appendices key success factors risks & contingencies
EMPOWER. 3 timeline Sept 2019 Sept 2021 Leadership grip, culture & change management ACTION OWNER KEY ISSUE TRACKER Hire COO & E-Sports SMEs Financial performance CEO Market trends Leadership retreat CEO Human capital Change management strategy CEO 26 key issues analysis preferred solution implementation alternatives appendices key success factors risks & contingencies
phase 3 costs initiative cost Talent acquisition costs $100,000 Leadership retreat $100,000 TOTAL $200,000 27 key issues analysis preferred solution implementation alternatives appendices key success factors risks & contingencies
revenue projections 28 key issues analysis preferred solution implementation alternatives appendices key success factors risks & contingencies
future considerations & funding League expansion to Europe & abroad Carbon copy US success 1 Explore further sponsorship & partnership opportunities for funding E-sports teams Professional sports leagues (i.e., NBA 2K, FIFA for European expansion) 2 Texas venture capital investments Funding for product and geographic expansion 3 29 key issues analysis preferred solution implementation alternatives appendices key success factors risks & contingencies
key success factors Number of GameNOW league participants Increased trust at leadership level FACTOR Online sales TARGET 100,000 10% 90% Employee satisfaction TIMELINE 2021 2021 onwards 2021 31 key issues analysis preferred solution implementation alternatives appendices key success factors risks & contingencies
risks & contingency plan risk likelihood impact contingency plan Heavier focus on viewing parties & additional experiential events Licenses & partnerships Medium High Delay of transformation of retail stores Push online start to league & hype up efforts Low - Medium Medium Re-evaluate locations Increase targeted marketing efforts League engagement & member sign ups Low High 33 key issues analysis preferred solution implementation alternatives appendices key success factors risks & contingencies
GameNOW E-Sports League Introducing GameStop s new E-sports league, GameNOW Fundamentally changing GameStop s retail experience. Supported by an online portal for gamers and consumers alike. 34
appendices 35
revenue projections 36 appendices
