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GameStop/EBGames Retail Store Merger Project | |
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Author Matthew T. Durham American River College, Spring 2005 Geography 350: Data Acquisition in GIS mtdurham=[NO]=@=[SPAM]=comcast.net | |
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Abstract With the recent (04/18/05) merger announcement between EBGames and GameStop, all retail locations for both chains will fly under the GameStop flag. Some locations, however, will be closed due to excess saturation in previously cometitive areas. The goal is to determine which retail locations would best be suited for closer and/or merger. | |
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Introduction The results found in this project should help to locate and identify potentially suitable EBGames retail locations for merging as well as EBGames (and possibly even GameStop) locations suitable for closing. After locating all of the retail locations in Sacramento County, a specific area (East Sac/Arden Fair) was chosen due to its density of retail locations for both companies. This is the area that will be focused upon for the purpose of this project. | |
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Background On April 18, 2005, GameStop Corp. and Electronics Boutique Holdings Corp. announced that that they have entered into a definitive agreement and plan of merger. The combined company, to be named GameStop Corp., will be a leading global video game retailer with annual revenues of approximately $3.8 billion, with over 3,200 stores located in all 50 United States, the District of Columbia, and Puerto Rico, as well as nearly 600 international stores located throughout Australia, Canada, Denmark, Germany, Ireland, Italy, New Zealand, Norway and Sweden (Yahoo! Finance, 2005). | |
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The map to the right denotes all of the retail store locations in Sacramento County that would potentially affect any decision for store merger/closure. Some locations are direct competitors from before merger (Dimple, GameCrazy, etc.) while others are stores that were indirect competition before the merger (BestBuy, WalMart, Target, etc.), but will be more direct competition after the merger, due to the combined size of the companies merged. (M. Durham, 2005) |
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Methods The first step in discovering which retail locations are best suited for merger/closure is to identify all retail locations for the two companies that are merging, as well as all locations of their competitors as well. For this step, I started by using the various store locators for all known/major competitors, and compiled the list into a spreadsheet. When this stream was exhausted, I then looked into smaller retail outlets that were also in the same field (i.e., Video Games) to finalize the spreadsheet. Once the spreadsheet was finished, I needed something to compare the information to spacially. For this I used the Sacramento County Roads information from The California Spatial Information Library and GeoCoded all of the locations on my spreadsheet by their specific address. This brought me most of the way to where I needed to be, but I still needed specific information about how much traffic each retail location had. For this, I interviewed the Regional Sales Representative for Nintendo Co., Ltd. (one of the three biggest video game companies in the world). Since he travels to each retail location monthly, he had all of the information I needed and more. After the interview, I loaded the traffic information into my Geodatabase and had everything I needed to create my video game retail locations map for Sacramento County. | |
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Results  | |
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Analysis Upon reviewing the store traffic information for the retail locations in the target area, two things appeared evident: (1) Both EBGames locations in the area should be merged, and definitely not closed. Both locations are High Traffic locations, and while one is near an existing GameStop retail location, it is inside of Arden Fair Mall, which is a presense that cannot be lost; and (2) With the merger of 2 EBGames retail locations (most specifically the Arden Mall location), a Low Traffic GameStop is definitely suitable for closure. This leaves one quiestion: the High Traffic GameStop location near Arden Fair Mall. This location appears too close to the EBGames location to not be a suitable candidate for closure, but the fact that both are currently High Traffic locations leads one to believe that perhaps both could maintain their High Traffic status even after the merger. More specific sales information would be necessary to determine this, since there is a strong possibility that the previous competition between the two stores may have increased the Traffic to both stores. If the High Traffic status is simply a result of population or other external factors, then both retail locations should maintain their High Traffic status even after the merger. This GameStop location is quite the enigma. With the information found in this project, the most likely course of action would be to keep the High Traffic GameStop retail location open, and re-evaluate its status in regular intervals after the merger. If both it and the merged EBGames Mall location kept their High Traffic status, then both could remain open permenantly. | |
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Conclusions The results were not 100% conclusive, and further examination of external information could get the results closer. In the end, both EBGames retail locations were found to be suitable for merging, and one GameStop retail location was determined suitable for closure. The question is regarding the second GameStop retail location noted in the analysis. This location is very close to a High Traffic EBGames which will be merged, so it may be suitable for closure. However, it is also a High Traffic location, and the fact that the nearby EBGames location is situated inside of Arden Fair Mall, it may still be able to maintain its current level of traffic, in which case it would be worth keeping them both open. | |
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References
EBGames Store Locator. 2005. http://www.ebgames.com/ebx/default.asp#. Site Accessed: 05/05/05. GameCrazy Store Locator. 2005. http://gamecrazy.com/StoreLocator/. Site Accessed: 05/05/05. GameStop Store Locator. 2005. http://www.gamestop.com/locatordetail.asp. Site Accessed: 05/05/05. Google Maps. 2005. http://maps.google.com. Site Accessed: 05/05/05. Mears, Rick. 2005. Nintendo Regional Sales Representative. Interview Date: 05/13/05 Yahoo! Finance, April 18, 2005, http://biz.yahoo.com/bw/050418/185419.html?.v=1, GameStop Corp. and Electronics Boutique Holdings Corp. Sign Definitive Merger Agreement. Site Accessed: 05/05/05. | |
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Appendices
California Spatial Information Library - http://gis.ca.gov/ GameStop Investor Relations - http://www.gamestop.com/investor-relations/ Electronics Boutique Holdings - http://www.ebholdings.com/ | |