GameStop plans revamped loyalty program, expanded downloadable offerings

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Video game retailer GameStop will begin testing a revamped loyalty program in May. It will also expand its downloadable offerings, according to its March 18 earnings call for the fourth quarter of 2009.

Paul Raines, COO of GameStop, said on the call that the retailer plans to incorporate elements of the MegaCard loyalty program by Micromania, a French video game retailer GameStop bought in 2008. GameStop now runs a loyalty program called Edge.

“We have not determined at this time what the future holds for Edge or the new loyalty program,” explained Chris Olivera, VP of corporate communications and public affairs at GameStop. “Both will exist in some form. We're looking at a richer loyalty program that has some of the elements that we have mined from our sister company Micromania.”

GameStop recently surveyed its customers to see how a loyalty program could improve its business, Raines said on the earnings call. The company will test the initiative at first in four markets, which Olivera would not reveal. The program's budget will come from $125 million set aside by the company for “improvements, information system support, refurbishment upgrades, distribution expansion and loyalty program enhancements” in fiscal 2010, according to a statement.

Raines also said on the earnings call that point cards, digital game downloads and other digital products and services generated $170 million in sales for the company last year, representing a 55% growth rate over 2008.

GameStop will promote downloadable content through test kiosks in 30 stores this year. Olivera said the hires of Shawn Freeman as SVP of digital commerce and Chris Petrovic as GM of digital ventures are evidence of the company's commitment to increasing its digital market share.

However, it also plans to incorporate its bricks-and-mortar locations into these efforts, he added.

“[Freeman and Petrovic] are looking at all the opportunities to leverage our bricks-and-mortar stores,” Olivera said, adding that new initiatives are focused on “making the downloadable content discoverable through our retail stores.”

GameStop's total sales for Q4 2009 increased 0.9% to $3.52 billion from $3.49 billion the prior year. For fiscal year 2009, total sales increased 3.1% to $9.08 billion from $8.81 billion for FY 2008. Comparable store sales, however, decreased 7.9% for both the quarter and the year, which executives attributed partially to reduced product prices, especially for the Nintendo Wii and Sony Playstation III.


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