GameStop powers up with Geeknet acquisition

Video game retailer GameStop has been lauded as a company that understands its customer base. Staffing stores with employees who are themselves gamers, the chain combines the sense of enthusiasm and curatorial spirit one gets at a mom-and-pop with the sort of data available to a sizeable chain with big technological resources.

One of the results of this model is the chain’s PowerUp loyalty program, which, in addition to sending customers hyper-targeted emails about new games, places a customer’s purchase history in the hands of an employee who can make recommendations on the information. Now GameStop is taking a step that may embed the retailer even further into both the lifestyles and shopping habits of its customers with the acquisition of Geeknet.

Geeknet, which has gone by different names and has been owned by different properties over the years (including such high-profile websites as techie-news site Slashdot and open source community SourceForge) is now exclusively the owner of ThinkGeek. ThinkGeek is a retail website that sells sci-fi/fantasy, gamer and comic book-related merchandise as well as electronics, gadgets and gadget accessories. Many of the products are tied to branded properties such as Star Wars, Dr. Who and Minecraft, though some products are of general nerdy interest, such as zombie coffee mugs and molds to make skull-shaped ice cubes.

Think-geek shirt

Source: thinkgeek.com

It’s easy to see how products available from the ThinkGeek webstore could be a natural fit for the gamer crowd, given the cultural overlap between its clientele and video game fans. It’s also easy to see how data on ThinkGeek purchases could further inform both the selection and the way employees approach customers in GameStop brick-and-mortar stores.

The company already has a massive amount of information it uses to generate a "360-degree customer view." In a recent interview with BriefingsDirect, John Crossen, data warehouse lead at GameStop, said that the company has 24 terabytes of customer data.

"A lot of it is just based on determining who is likely to buy which series of games," said Crossen in the interview. "So you won’t market the next Call of Duty 3 or something like that to somebody who’s buying your children’s games. We are not going to ask people to buy Call of Duty 3, rather than My Little Pony 6."

Before the acquisition went through, GameStop was not the only company to express interest in Geeknet. Teen retailer Hot Topic had agreed to purchase Geeknet for $122 million but was outbid by GameStop, who bid $140 million.

BrainTrust

"What I really love about GameStop is that every location seems to have staff that are gamers themselves. This goes a long way in building loyalty already. Imagine arming the staff with purchase history from ThinkGeek."

Gajendra Ratnavel

CEO, L Squared Digital Signage


"GameStop is simply one of the best retailers at executing total customer relationship management in store and online. The most important aspect of GameStop’s execution is that they truly use their massive data to personalize their service and offerings to the individual customer based upon their profile and purchase history."

Chris Petersen, PhD.

President, Integrated Marketing Solutions


Discussion Questions

How can GameStop best capitalize on the data, audience and merchandise it now owns because of the Geeknet/ThinkGeek deal? Is there the possibility of brand dilution or other pitfalls stemming from taking on a property that is not primarily video game-centric?

Poll

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Gajendra Ratnavel
Gajendra Ratnavel
8 years ago

What I really love about GameStop is that every location seems to have staff that are gamers themselves. This goes a long way in building loyalty already. Imagine arming the staff with purchase history from ThinkGeek. This is phenomenal information to make recommendations but also to bring the staff and customer even closer. The key would be figuring out how to get this information to the staff quickly and efficiently when they need it.

Gordon Arnold
Gordon Arnold
8 years ago

There are few markets with the need and demand for more new products, power and speed in the electronics industry as we see in gaming. Defense and engineering are front runners as well but those markets maintain forced budgets with rigidly planned appropriations. In gaming, members’ ever expanding budgets are supplemented on demand with forfeitures forked over from other budgets like food, clothing and just about any or all others for more power and upgrades. The risk is in new product development where the front-end sunk costs are very high and a couple of failures can easily make the company go away.

Most new product and software is borrowed or rented to determine the need which is always controlled by subjective consumer parameters. The need to know the manufacturer’s customer base is an imperative that owns constant and unrelenting consumer change caused by many intangibles. Any amount of predictability and/or trending analysis with demonstrated reliability will greatly aid in efforts to reduce the risks in investment dollars for new products or existing product upgrades. This makes borrowing easier with better bank rates as well.

These are a few reasons that make reliable detailed consumer information and trends so valuable to the gaming industry. A close monitoring of this market will reveal many new and interesting consumer perspectives for all retailers. If you can find the time have a look for yourself, you might be glad you did for what is found.

Chris Petersen, PhD
Chris Petersen, PhD
8 years ago

GameStop is simply one of the best retailers at executing total customer relationship management in store and online.

The most important aspect of GameStop’s execution is that they truly use their massive data to personalize their service and offerings to the individual customer based upon their profile and purchase history.

It’s one thing to say for GameStop to say: “We are not going to ask people to buy ‘Call of Duty 3,’ rather than ‘My Little Pony 6.’” It’s quite another thing to actually be able execute that with each customer as they enter the store. GameStop customers readily share their data with the retailer because they get a LOT of value in return, plus reasonable security.

The purchase of Geeknet appears to be a very smart acquisition for GameStop. The lines of merchandise are compatible and appeal to GameStop’s core customer base. Most importantly, GameStop has the experience and infrastructure for using their incredible database to leverage the sales of these new merchandise lines.

The boys of the “Big Bang Theory” would be lined up for this one!