STORES Magazine - June 2011 - (Page LP44)

LOSS PREVENTION / Q&A Leading by Example GameStop CEO says LP is everyone’s call of duty BY LIZ PARKS P aul Raines oversees a company purported to have one of the best shrink rates in all of retail. “We don’t disclose figures,” The GameStop CEO says, “but it’s the lowest shrink rate I’ve ever been associated with.” That’s all the more remarkable when you realize that GameStop is the world’s largest video game and entertainment software retailer. GameStop operates 6,670 retail stores in 18 countries, hosts e-commerce and gaming sites including and, and publishes Game Informer magazine. Raines recently spoke with STORES about the strategic importance of integrating loss prevention into all aspects of a retail business. How did you become so deeply involved with LP? team in the field is very tightly integrated with the sales team. Do you use exception reports to identify issues that may be negatively impacting profits by increasing shrink? Well, when you are a regional vice president [of The Home Depot] and you go through six hurricanes in two years, you learn a lot about shrink. What are some of the things you learned? Paul Raines Yes, we have an extraordinary homegrown exception reporting system called Sherlock. Can you describe how Sherlock helps you identify potential loss problems across all activities? When you sell digital products in real time, there is less time to check on the validity of the credit cards you accept. Is that one of your new challenges for LP? Good LP procedures, policies and disciplines are very important. I always say LP is a process, not an event. So it’s not about the one day where you take an inventory count. It’s about the rest of the year that creates that one day. In what ways is LP integrated with the business side of GameStop? To begin with, Tina [Sellers, head of LP for GameStop] is a member of the management team and is involved in all team meetings and discussions. Our company is heavily engaged not just in LP, but in what Tina calls “profit protection.” How do you mean that? Sherlock is an exception reporting system on steroids. The fact that we take trades in our stores adds a wrinkle to loss prevention. We need to be able to monitor trade activity as well as sales activity. Sherlock lets us monitor trades as well as sales by geography and by individuals. You also have digital businesses such as and, which are probably also very complicated to manage. Credit card fraud, of course, is going to be a factor in anything on the Internet … We’re not clear yet on what the business model will be for our streaming business, but we might stream only those games that someone bought from us. We might sell through subscriptions. We’re seeing a lot of “hybrid consumers” as we call them: People who buy physical goods in the store, but who also buy digital merchandise. And all of those customers may become candidates for the streaming business. LP’s role in that, I think, will revolve around payment terms [and monitoring for] fraudulent activities on their accounts. Some retailers still tend to regard LP as a “cops and robbers” undertaking and don’t always integrate it into all aspects of their business. How much different is GameStop’s approach? Well, today we are a hybrid company involved in selling digital products as well as traditional physical products like video game systems and accessories. The LP team is right in the middle of helping us find how digital products can be measured and sold in stores. That’s an example of how the LP leadership LP44 STORES / JUNE 2011 Our digital business, as we grow, is amazing. grew over 100 percent last year in volume. We have also added an online game platform called and Spawn Labs, a streaming technology company. In addition, we have entered into an agreement to purchase Impulse, Inc., a leader in digital distribution. Because of the nature of our business, we spend about 25 to 30 percent of our task hours in the stores processing the buy/sell trade model, which means WWW.STORES.ORG http://WWW.STORES.ORG

Table of Contents for the Digital Edition of STORES Magazine - June 2011

Stores - June 2011
Editor’s Page
President’s Page
Retail People
CEO Compensation
Customer Service
Business Strategy
What We’ve Learned
Loss Prevention Supplier Directory
Customer Rewards
Business Management
Social Media
Planning Solutions
Loyalty Programs
Business Intelligence
Store Operations
Divisional Update
NRF News
Point of View
Retail Industry Calendar
End Cap

STORES Magazine - June 2011