Over the weekend, an anonymous GameStop customer secretly recorded and sent us their conversation with a GameStop store manager, who admitted that employees are "given less hours" if they fail to meet the company's sales quotas of used games. We've confirmed the video's authenticity, and distorted its audio and the manager's name tag to protect both parties' identities.
This video confirms reports by Kotaku's Jason Schreier that the company's long-standing business practices have been turned into a new sales strategy called "Circle of Life," assigning each GameStop store and employee different percentage quotas for used game sales, game trade-ins, pre-orders, and PowerUp Rewards card subscriptions. The Circle of Life program started late last year, but is being more aggressively monitored as of late.
According to Kotaku, these quotas are given based on individual GameStop stores' total transactions; used game sales and trade-ins are based on the total dollar value of monthly transactions. For example, if a store's used game sales quota is set as 25% and it sells $1,000 of merchandise, a minimum of $250 of that merchandise from that month must be pre-owned. Kotaku's sources confirmed that corporate managers not only monitor stores' performance based on these percentages, but also that of individual employees, alleging staff "may face punishment or even lose their job" for not meeting or exceeding quotas.
The store manager in this video somewhat disagrees with that claim, who is heard telling the anonymous customer, "It’s not the big threatening thing like 'Oh, you’re going to lose your job over it.' Yeah, you’ll be given less hours over it. But you can always work on making it [a] better goal to get yourself more familiar with the selling culture that retail is."
The cycle of the Circle of Life is that GameStop expects customers to buy games from its stores, trade them back in, and use their store credit to buy more games. Since the company's profit margin for used games sales is much higher than it is for new games, the company instructs employees to push used games aggressively.
At the same time, however, this sales policy can potentially punish employees for selling brand new games or consoles. For instance, if a customer buys a new copy of any game or console without pre-ordering something, subscribing for a new rewards card, buying something used, or trading in games for credit towards that new copy, then that transaction will lower the overall percentages. According to multiple verified emails sent to Kotaku by current or former GameStop employees, this led to a toxic corporate culture where middle managers and their staff deliberately lied or mislead customers, telling them that new consoles or copies of games are out of stock when, in reality, they're not.
GameStop doesn't shy away from encouraging pre-orders and reward card subscriptions in the past, but this Circle of Life initiative represents a more targeted approach, and one that potentially threatens employees, store management, and GameStop's customer base. It also comes at a time when GameStop's sales figures have been "weaker than expected," according to their latest financial report.
You can read a full transcription of the video below, which has been edited for the sake of clarity:
Customer: “Have you guys, I was curious, and I don’t know how much you can speak to it but have you seen that GameStop report, that [Kotaku piece] out there?”
GameStop Store Manager: “Yes. That guy’s an idiot.”
C: “He’s an idiot?” [laughs]
GSM: “Yeah. There are some, like I would say for sure, that there are some people that are not too…they don’t hear the actions too well. We are instructed to, you know, let them inform guests about the pre-owned games, but we’re not supposed to force the option of ‘We don’t have that system in stock,’ when we do. We’ve never done that before and I don’t know why that person was being…”
C: “Specifically about consoles?”
GSM: “Yes, yeah. We would never say that we don’t have it when we do, that you would be forced to get the pre-owned. We would always say ‘Well we don’t have it in stock. You can order one online. Or, if we have it at a better price for you, we’ll let you know.’ We’re not going to say ‘Oh well then we don’t have the new kind of thing.’ Yeah, and I just…it frustrated me so much hearing him say…they were saying that the store was being forced to do this kind of thing because I’ve never had a manager tell me to do that kind of thing.”
C: “Even games-wise, you guys don’t have specific quotas, for used games?”
GSM: “I mean, with any store in general, that’s how GameStop makes their profit program.”
C: “Yeah. I mean, it makes sense. It’s a directive.”
GSM: “Yeah. But if we don’t meet [the quotas] for that day, we’re not going to stress about it because we can still go throughout the next couple days to weeks going through and getting a good amount of (unintelligible.)”
C: “It’s mostly up to…it’s like sales targets for managers. Managers are the ones who care about it?”
GSM: “Most of the time, yeah. I’m part of the management myself, but one of the lower part of it still. So I don’t know. It’s not the big threatening thing like 'Oh, you’re going to lose your job over it.' Yeah, you’ll be given less hours over it. But you can always work on making it [a] better goal to get yourself more familiar with the selling culture that retail is.”
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