Last week I spoke at some length on the basis from which game retailers work, which is to separate you from your money in the most profitable fashion possible. Fundamentally, this revelation should not have been particularly surprising in any substantive way beyond the operational specifics as to how these companies achieve that goal. Nor, should a company putting forth its best effort to be profitable be immediately considered offensive or disingenuous. The fact that these specialty shops are moving necessarily from the slim margins of new product to the high margins of preowned does no inherent disservice to the consumer. Their pricing, products and promotions either appeal to consumers or don't. In the end customers retain the right to take their money elsewhere, and the integrity of the free-market is conserved - or at least that's true when there is no deception at the point-of-sale, which is, sadly, not always the case.
Let me state from the beginning, so there is no confusion: At no time during my employment with either Gamestop or EB was I ever directly encouraged by management or corporate to deceive our customers.
That's not to say deception doesn't happen. As I pointed out last week there is intense and increasing pressure from these corporations to operate their locations at a profit. It's a necessity, particularly as Gamestop's acquisition of EB will leave the company 3000+ stores strong in the U.S. alone. They simply can't afford to have any significant percentage of locations losing tens of thousands of dollars a year.
It's a situation that the company has struggled with before, where in September of 1996 NeoStar Corporation, then parent company of Software Etc. and Babbages, filed for voluntary reorganization under Chapter 11. The problem with NeoStar was complex, but at least some significant portion of the issue surrounded its ambitious and rapid expansion following the merger of Software Etc. and Babbages matched against poor profitability for, what was then, primarily mall based locations. The number of stores under the NeoStar banner at the time the company filed for protection numbered 707. This new merger with EB will put Gamestop at nearly five times that size.
NeoStar was eventually liquidated and restructured, after closing nearly a third of its locations, as Babbages Etc., and then in June 2000 Barnes & Noble purchased the company and reformed it yet again as Gamestop, Inc. Barnes & Noble has sent sold the majority of its shares back to Gamestop leaving it a largely independent, though closely affiliated, coporation.
Although Gamestop has worn many faces in the years leading to its current market dominance, most of the executive management and directors for the current company have been involved since well before Software Etc. and Babbages merged. From Dick Fontaine, to Dan Dematteo, to David Carlson, to Len Riggio, though the corporation has changed identity, its top executives have not. The impending merger with EB will certainly propel the new bolstered company into Fortune 500 status, and having lived through the crisis of Neostar before, the lessons learned will intensify the need to operate profitably, at all costs.
The mandate isn't necessarily explicit for store managers, but it's certainly implied. Become profitable, or you and your staff lose their jobs.
So, when you walk into your local retailer, understand that customer service is only important to the degree that it's profitable, which may go some length toward explaining why labeling oneself as a gamer is probably a burden if you want a job with EB or Gamestop. It's been noted and lamented that once these stores were a place where likeminded clerks well versed in the gaming canon could expound endlessly on virtually every product. Such is certainly no longer the norm, and those gamers who do find themselves employed are often quickly shocked at how little of the job revolves around interacting in any positive sense with fellow gamers.
Not only has the clientele for these specialty chains changed as gaming becomes more ubiquitous, but the influence from vendors and publishers has also increased dramatically. High profile shelf space is purchased for startling amounts by publishers anxious to draw customer attention. Incentives are put in place to encourage employees to talk up certain games, as are disciplinary actions for those who do not reach reserve and sell-through quotas for corporate partners. As often as not, when an employee is pushing a game reserve, hot new title, guarantee, or used item down your throat, it is not out of genuine enthusiasm, but because they are being carefully tracked. He who can move the promotions gets the hours.
So, having gamers as employees is seen more often than not as a liability. Of the successful managers I knew, almost all agreed that an applicant who strongly promoted their knowledge of video games in an interview was usually dismissed. The magic word is: Salesman. Having a strong background and dedication to sales is the emphasis for employment at these locations, as the point-of-purchase becomes, by necessity, a higher pressure environment. I've seen people hired on with absolutely no knowledge of the product being sold, who first think of solitaire and Pac-Man at the mention of video games, into even store management positions, their designed goal having less to do with be product-savvy and more to do with their ability to make a customer walk out the door with something preowned, a warranty, a subscription to some magazines, and a reserve on a game they didn't even know they didn't want.
And in this higher pressure environment where salesmanship and performance is a premium, abuse naturally happens. Like I said at the start, these companies never tell their employees to be deceptive, but they don't necessarily require the full truth, and they don't tend to punish strong-arm sales tactics. The culture is such that employees and management often do whatever it takes to meet expectations.
Take for example preowned and refurbished systems. Among the former managers and staff of EB in my area it was widely known that the return and failure rate on in-house refurbished systems was tragically high. More often than not we expected to see a refurbished system exchanged within a day or two, either as completely non-functional or defective when customers played longer than a few minutes. I grew to dread selling refurbished systems, as it regularly created a situation where customers had to come back multiple times to resolve their issue. Considering EB has a strict no money back policy on all systems sold - I can't speak toward Gamestop's current policy on system return, though I suspect it's the same - we were put into the position of having to often simply exchange one broken system for another until either the customer found one that worked well enough, or upgraded to a new system (which, we were not encouraged to offer for the lower margin). I've seen customers come back as many as three times with three different refurbished systems that did not work.
The problem, I suspect, begins at the trade-in level where value is offered for broken systems which are then sent out to be refurbished. Unfortunately, there is no dialogue between customer, employee, and the refurbishment center, which means when it arrives to be repaired and ultimately resold, the technicians have no idea what exactly is broken. So if, for example, the system tends to stall after more than a few minutes of playing, then the technician doesn't know the conditions under which the defect occurs. I can't speak to the methodology of the refurbish center or its technicians, but I must assume it's not very thorough. EB has spoken of internal steps toward resolving this matter and improving the quality of the product, but as yet I've seen little or no improvement.
However, if you ask the salesman behind the counter whether the refurbished systems are a good buy, most of the time he will tell you it's just as good as new. Since internally refurbished units still count toward that higher profit margin preowned sector of sales, then talking you into the refurb and away from a brand-new system significantly helps their personal performance as well as that of the store. And, of course, you're far more likely to purchase extended protection (usually offered at only half the length of that for a new system) on a preowned system. You're more likely to do this because a good salesman will point out that the system with the warranty is still less money than new, because the system is no longer protected by the original manufacturer, and because you probably have less confidence in preowned product and are more open to the idea.
And once you've taken that refurb unit home, the worst case scenario for the store becomes that it doesn't work, you bring it back, and either exchange it for another refurb unit - which you can count on being pressured into - or you upgrade the purchase to a new system and pay the difference. Getting your money back is virtually impossible unless you are a regular customer worth keeping happy, or you complain loudly enough (loudly enough meaning directly to corporate, not raising your voice).
Let's consider another example. You, as a customer, walk to the front counter and ask if I have a copy of, say, Fable. I look up the inventory on my computer and see that I have seven new copies and two preowned copies. Care to guess which copy I'm going to pull off the shelves and put in your hands? Am I likely to tell you you're actually buying a used copy of the game? Well, if you're dealing with me in particular then, yes, but I was not under any obligation outside my personal ethics to do so. Now, if you ask the salesperson whether the game is used, they are supposed to answer honestly, but it is not information they have been coached to volunteer. It is not precisely misrepresenting the product with signs all around the store promoting preowned product, and the obvious fact that the employee must retrieve pull the disc and replace it back into its case - though that is increasingly done with new product as well - should be evidence that the game is not new, but a talented salesperson will be subtle, and have you on your way before it ever occurs to you that you might not have an unused copy of your game. And, of course, if you are clever enough to point out they are offering a used product, then a good salesperson will fix you with a surprised and innocent look and remind you that you'll obviously want to save five dollars on your game; that way you can protect it for a year with our Guarantee and still save some dollars.
The policy and directive is that if a customer is buying an item and the store has it used for less money than there is no excuse for the sales staff to let that customer leave with new product. An inability to convince you, the consumer, that used is in your best interest represents a lack of competence for a salesperson, and if they do not meet standardized quotas in the percentage of their total sales toward preowned then they can and will be disciplined or fired.
This all raises the question, then, is used product as good as new? Well, it can be, but often isn't. As we've already seen in the case of internally refurbished systems, there can be a high failure rate for preowned systems. The percentage isn't dramatically better for non-refurbished preowned systems- those systems that are traded in to stores as working. When those systems are traded in, at best they are checked to make sure they actually power up and start up a game - though many employees and locations will just take the customer's word for it - but many systems will start up fine and exhibit defects after stretches of continuous play. It's entirely accurate to say that preowned systems, even in the best of situations, are a far less reliable purchase. It's one of the genuine cases where a salesperson is being honest when they say you'd be a fool to buy one without an extended warranty of some kind.
Games are a trickier issue. The best way to know ahead of time if you can rely on a preowned game is simply check its condition before buying it. Be that guy. Don't count on the staff to have only taken in games in resalable condition. It's a far better risk to take in every game and resell as many as possible, swallowing the occasional return (which, considering the inflexibility of return policies, means an exchange for the same or equally priced item) and counting on people not being careful about their purchase.
The culture of these retailers is changing from what many of us remember toward a dramatically more sales driven environment. While these companies may not encourage deception at the store level, the high pressure to perform in critical areas will often bring out a deceptive, or at least not entirely forthcoming, nature to the individual employee sales tactics. It's no longer about an employee selling his favorite game, but his selling the game Publisher X has paid large sums of money to have him sell. It's no longer about staffing gamers to appeal to a gamer clientele, but staffing salespeople who will appeal and successfully sell to moms and dads who will buy whatever they are told their kids want. It's not about selling the highest quality product, but trying to move the lower quality, higher margin product and suffering the repercussions as they arrive. And, as the two biggest companies in this specialty retail industry prepare to merge in the third quarter of 2005, you can only expect those patterns to strengthen.
Next week: tips on how to take back your power as a customer, and some clarity on what to actually expect from Gamestop's purchase of EB.