GameStop: The Shift from Physical to Digital Gaming | In Practise

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GameStop: The Shift from Physical to Digital Gaming

Former CEO at Gamestop

Why is this interview interesting?

  • Outlook on the shift in physical to digital games
  • How GameStop use private label and collectibles to drive margin growth
  • How the used market functions and challenges driving volume
  • Challenges of GameStop and brick and mortar versus Amazon
  • Importance of the customer loyalty program at Gamestop

Executive Bio

Mike Mauler

Former CEO at Gamestop

Mike is the Former CEO of GameStop, the gaming retailer with over 5,500 stores globally and $8bn of revenue. In 2005, he joined GameStop as the Global Distribution and Logistics President before leading Gamestop International, where he was responsible for over 2,000 stores and 12,000 employees, from 2010-18. Prior to GameStop, he enjoyed 20 years building and running retail and supply chain operations for companies such as Fisher Scientific, Mattress Discounters, and Electronics Boutique. Mike now advises various startups and lectures at universities throughout the US. Read more

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Interview Transcript

Can you set the context for when you were promoted to run Game Stop International?

It goes back to the theme that I’m going to talk about later: always volunteer. There was a position open to run international. They were having a tough time finding somebody to do that. I finally raised my hand and said I’ll do it, I’m ready. I spent the next ten years basically travelling internationally three weeks a month and working with other countries to turn around their businesses. I think that it was really interesting that a lot of the countries were just doing things on their own with not a lot of oversight. I helped pull everybody together and bring the business forward.

How did you deal with the different approaches that different countries and cultures had to running a gaming business?

You’ve got to be flexible. You can’t manage Germany like you manage Italy. It was always a challenge to try and move everybody forward at the same speed, but at the same time, you have to do totally different methods. I think one of the keys to that is being able to recognize the differences, whether it’s culture, whether it’s the business circumstances, whether it’s any of those things, I think you’ve got to be able to differentiate between what you’ve got to do in different businesses.

Did you standardize any processes or did you change anything material for Europe?

Absolutely. In the beginning, it was more about just getting everybody to be on the same page. Later, I implemented shared services in Ireland and head of accounting and HR and a few other functions, IT, centralized in Ireland to be able to get everybody to work together and save a lot of money, as well as being much more efficient.

Walk me through then. You step into the role, you’re running Game Stop International, what exactly was your strategy?

My strategy was to make the international businesses much more successful, frankly, than the U.S. business at that time. I wanted these guys to – it was an interesting structure. Each market, there were 14 countries, there were 7 regional markets and each market had a CEO. In Europe, they call those managing directors. The whole strategies were to get the managing directors, one, to feel like it’s their business, because they had everything. I had finance, I had IT, I had distribution, store ops, marketing, all of that. The strategy was to get them to be able to feel like they’re accountable and they can make a difference with their business. At the same time, get them to work together. I think that was the big turning point when we were able to do that.

How did you do that?

A lot of internal meetings. A lot of communication. I told my guys, look, my role is not to be your big boss. My role is to guide strategy. My role is to give you the resources that you need. At the same time, to martial communication between all of the different entities. I think that worked, it took a couple of years, but I think that worked very well.

What was the most difficult part about martialing that communication between different regional CEOs?

Yes, that’s a good question. The most difficult part was, each CEO or MD was from a personality perspective focused on their business. They couldn’t care less. The guy in Italy couldn’t care less about what the guy in Spain was doing. Over time, it’s like you have to care about what Spain is doing because they’re going to help you, as well. Especially when we talk to vendors and try to negotiate things. I think that they really did a good job of eventually coming around, despite their independent personalities and working together.

How did you structure incentives for these CEOs to drive accountability for their region?

I changed the bonus plan to make it much more about their bonus but also with a tag of the overall performance of the region. If you were the Spain CEO, you were bonused on your performances, like 80 percent, but now there’s a 20 percent bonus on the way Europe was going. There was an opportunity and an advantage for them to work with the rest of the countries to try to help things better because they would get an advantage out of it, as well.

Did that change their behavior?

It did. It took time. I took over international at the end of 2009 and it was probably 2015/2016 we’re seeing things come together. They started to work together. It was really great to see.

Working together, I suppose they were obviously trying to help each other’s businesses, but also then working together to negotiate deals with vendors or the big gaming companies, how exactly were they helping each other?

I think it’s probably a few things. I think it was sharing best practices on issues regarding inventory management returns and so on. At the same time, yes, the vendor side became much more unified. Yes, you had the countries working together to discuss discounts and purchasing and so on. Even sharing inventory, where if Spain had too many PS4s, they’d ship it to Italy. That’s something that wouldn’t happen before.

Talk to me about the negotiation process or that dynamic with the vendors, which are such a consolidated group especially in the gaming industry? How difficult were those conversations?

Well, they’re actually not a consolidated group, depending on the vendor. Some of the vendors, like Sony for example, are very diversified. The president of Europe for Sony reports into Japan independently of the president of the U.S. or the president of South Asia, which includes Australia. I think that in some ways we push the vendors to come consolidated and to think more globally about their businesses, which they hadn’t done before.

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GameStop: The Shift from Physical to Digital Gaming

April 22, 2020

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