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Game on!

What retailers can learn from the explosion of video game stores.

May 13, 2008

Ty Ramsey has his head in the game when it comes to selling the customer experience at his Louisville, Ky.-area GameStop store.

This is a Super Smash Bros. Brawl tournament, a video gaming tournament held at a GameStop, the leading vide o game retailer with more than 5,000 locations worldwide. And in-store events such as this are just one of the ways these stores draw in gamers.

Video gaming is big business — computer and console software sales rose to $9.5 billion in the United States in 2007. Retailers such as Wal-Mart, Target and Best Buy stock games and systems, but the specialty video game retailer has come into its own as a customer experience phenomenon.

"The overall environment and attitude of the store is fun," said Chris Olivera, vice president of corporate communications for GameStop. "We are in the entertainment business, and we understand that and we try to bring that point across."

There is much about the GameStop experience that is unique to the media market — for instance, the sale of used titles and trade-ins. But much more is germane to retailers in all markets — the passion, excitement and connectivity that are par for the course in a video game store are exactly the kinds of things that all retailers need to cultivate.

The passion, excitement and connectivity that are par for the course in a video game store are exactly the kinds of things that all retailers need to cultivate.

Hire passionate people

Walk into a video game store and it will become immediately clear that the employees play and love video games. Compare this with other categories of retail, where workers often struggle to manufacture enthusiasm for the products they sell.

"If you go to a Wal-Mart or a Target or some place like that, the guy or girl behind the counter typically doesn't know the games and hasn't played them," said Jeremiah Black, producer of the Web show PlayValue.tv. "The dudes at GameStop know the games, they love the games and that's who you want to buy from."

"We buy from people," said Eric Papp, president of Generation Y Consulting, which gives insight into the minds of young shoppers. "We need to see that they believe in the product before we will believe in it. You cannot teach passion."

"Retailers need to look no further than their own regular customers to proactively recruit associates," said Bob Richardson, president and CEO of retail training company Associates Interactive. He said in-store signage about job opportunities and "refer-a-friend" programs for current employees are useful techniques.

Digging deep conversationally during the interview can be effective for determining whether the person has real love for the category, or if they're just looking for a job.

"When discussing the category with a candidate, the interviewer should be able to detect the candidate's passion in their body language, and assess whether they can transfer their personal interest into a casual conversation," Richardson said.

Having passionate people on the job organically leads to great customer service. Mike Grau, a gamer living in St. Louis, Miss., said all it took was one really positive experience with a local GameStop franchise owner to make him a customer for life.

"I recently bought a PS3 from him, and had a few problems with a short in one of the cords," he said. "He told me to bring it in. He replaced all the cords with the more expensive gold-plated connectors and didn't charge me anything. Since then I've made it a point to buy all my games from him. Plus, he and his employees really know games and make great recommendations based on my preferences. Service like that will always bring me back."

"Passionate employees are powerful. Their passion is contagious," said Sam Geist, author of "Why Should Someone Do Business With You ... Rather Than Someone Else?" "Not only do they gladly go the extra mile, their electricity impassions their fellow employees to follow suit. Their passion creates an exciting environment in which to work and shop. They engage customers, which encourages them to buy."

For apparel retailers, that passion might come from people with a strong sense of fashion; for auto retailers, it comes from true car lovers, not just people looking for the best possible commission. True passion for a retail environment begins and ends with a genuine passion for the product being sold.

Master outbound communication

Regular GameStop shoppers can sign up for the company's e-mail news alerts, which drive different behaviors at different times of the week. One e-mail, sent early in the week, provides a general reminder of new products and upcoming launches; a second one, near the weekend, pushes time-sensitive specials to drive shoppers into the store on their days off.

Smart retailers that use outbound communication via e-mail do so strategically and judiciously. Hitting the list too often, or even hitting it periodically with content that doesn't resonate, not only drives unsubscribe requests but can tarnish the store's brand overall.

"The secret to having the best outbound e-mail marketing is setting up all your outbound e-mail efforts in a way which allows you to constantly improve," said David Fields, managing director of Ascendant Consulting, which consults with companies on how to optimize their customer-facing behaviors and whose client list includes IBM, OfficeMax and Kodak. "That means different campaigns with different frequencies to similar sets of customers."

Fields said smart e-mail marketers watch their response percentages closely, paying careful attention to what is opened and clicked and what is not.

"Once you learn what works for you, you still need to keep testing, because content changes, consumer preference changes and complacency will lead to a collapse in effectiveness."

The same rules apply to direct mail. Judicious use of the mailing list is key. For GameStop, each piece of outbound communication needs to convey something to the recipient that is both new and valuable. Don't send marketing messages just because you can — do it because the customer wants to receive what you have to offer.

Multichannel retailer Levenger, which sells high-end goods for readers, sends marketing content to its customer list when a new product is added to the catalog or when a price drop is announced. Those announcements are tied to what the customer has purchased before — for instance, a shopper who has bought products from the company's line of Circa organizers will receive word of new refills and accessories, while customers who have made other purchases receive different offers.

Excite with in-store events

One of the lynchpins of the GameStop experience is the video gaming tournament, which brings players of all ages and backgrounds into the store to compete for prizes — and produces that palpable buzz that comes from beating an opponent.

Not every retailer can make the case for a Super Mario tournament, but virtually every retailer can make the case for staging great in-store events.

Half Price Books, which operates more than 75 stores in 15 states, holds an annual "Half Pint Library Book Drive," in which kids and their parents donate gently used books to be taken to area children's hospitals. While they're in the store, customers invariably pick up new titles to replace the ones they're donating.

"Parents have told us that the Half Pint Library Book Drive teaches their children about the importance of philanthropy," said M.A. Hancock, Half Price Books' public relations officer. "Many kids set aside books throughout the year to bring in for our book drive. And they come in year after year."

Gaming stores don't have a corner on in-store events. Retailers in all markets can use them successfully, such as bookseller Half Price Books and its "Half Pint Library Book Drive." The event collects books for area children's hospitals and regularly encourages those who come with donations to stay and buy. (Photo courtesy Half Price Books)

Brands themselves can get in on the event action to generate excitement and traffic. STAGE Active-Brand Marketing recently developed and executed a campaign for New Balance that featured a park-like setting inside shopping malls, complete with grass, picket fences and the piped-in smell of a freshly mown lawn. Customers were invited to bring in their 4-year-old-and-younger children for a free photograph and a digital scan of the child's foot. Parents were given a printout with the digital image of the feet, along with specific information on what kinds of shoes would be best for the child.

"Unlike most marketing tactics which are passive by nature, where we hope the consumer comes to the brand, event marketing allows us to bring brands directly to the consumers," said Bob Petrosino, president of STAGE. "We strongly believe events can be used to create emotional connections between brands and consumers in fun, relevant and memorable ways."

Control supply chain and multichannel experiences

It's Friday afternoon, and a hardcore gamer is getting ready to leave work — and pick up a copy of "Bioshock" or "Gears of War" on his way home. He's been thinking about the game all week, and he's going to give his business to the retailer that has the product in stock and can offer it to him in a convenient fashion.

For GameStop customers, this means hitting the Web before heading for the car. After logging into their shopper account and browsing to any game that interests them, browsers automatically are shown the closest three stores that have the product in stock. In an era when online-only stores can offer deep discounts to those willing to wait for shipping, the immediacy of this online-lookup/instant-pickup can mean the difference between a completed sale and a lost one.

In-store or online, GameStop customers know they can find what they're looking for. If a gamer's in a hurry, he can reserve a game online and find the stores nearest him that have the game in stock. (Photo by Jim Rosendale)

"Product availability is a critical problem for retailers," said Dr. Nicole DeHoratius, assistant professor of operations management at the University of Portland's Robert B. Pamplin, Jr., School of Business. "Retailers that elect to reveal their inventory positions on their Web page must have a tremendous amount of confidence in these inventory positions. If they do not, they risk their relationship with their customers."

Unfortunately, Dr. DeHoratius said, many retailers are failing this test. She recently conducted an audit of 370,000 inventory records from a large retailer and found inaccuracies in 65 percent of them — "that is, the inventory system did not match the inventory position in the store," she explained. "The results of these inventory inaccuracies, we estimate, cost this retailer 1.1 percent of its retail sales and 3.34 percent of its gross profit."

Proper mastery of the supply chain boils down to not only having the right systems in place, but having proper handling of the products at the store level. That goes back to excellent associate training and comes full circle to the passionate employee — someone who is committed to making the store's systems work out of genuine love for both product and systems.