GameStop store managers and retail staff say the company is taking increasingly desperate measures to shore up sales, as the video game retail chain struggles with a massive loss of revenue caused mainly by a broad consumer shift to digital purchases.
In more than a dozen interviews with Polygon, current and former GameStop employees spoke of a tightening regime of strict sales targets and intrusive customer scripts, designed to extract as much value as possible from the company’s dwindling base.
All the employees we spoke to said they were concerned about the future of the company. Most reported their customer numbers had decreased noticeably in the last year.
“I’ve seen a change in the sheer desperation the company has towards its profit margins,” said one store manager with multiple years’ experience at the company.
“The company is frantic and distrustful,” said one assistant manager. “You can feel it in every message they send. The structure is falling apart and they’re scrambling.”
“I think they’ll close a thousand stores this year,” said one former store manager with many years’ retail experience. “They have to cut costs. The games retail market is dying.” Another manager said: “My store is well known for solid sales performance. But customer traffic has dipped significantly in the past two years. Aside from some expected high-traffic days like Thanksgiving, Black Friday, and major game release days, we’re missing our daily sales plans almost every single day.”
All interviews for this story were conducted via email or phone. In order to protect employees from disciplinary action, the interviews were conducted under condition of anonymity. We have contacted GameStop and requested an executive interview or statement, but have received no reply as yet.
For many years, GameStop has been at the center of video gaming culture. The company runs more than 5,600 stores around the world, of which 4,000 are in the United States and Canada. But the retail giant is in serious trouble. Its most recent string of financial results is woeful.
GameStop’s share price, despite being at a 15-year low, is seen as poor value by investment analysts. Recently, one of its leading investors defaulted on an $8 million debt. Analyst Zacks Equity Research said the company “has been unable to adapt to the rapidly changing landscape,” and is “another brick-and-mortar victim of the retail apocalypse.”
The company’s response to its troubles has been to cut costs and shut down “underperforming stores,” with a warning that more closures are likely. Meanwhile, senior executives point to the imminent arrival of the next console generation, due this holiday season, which they say will boost sales.
In a recent statement, GameStop chief executive George Sherman sought to assure nervous shareholders, saying that the company is prepared for “increased new revenue streams in advance of new console introductions for holiday 2020,” when the PlayStation 5 and Xbox Series X are scheduled to arrive.
But retail staff and former corporate managers told Polygon that the company’s problems are rooted in changes in consumer behavior, which are far more serious than a cyclical downturn. They also say that current hard-sell tactics are doing more harm than good.
“I don’t think [senior executives] even believe that this is just a cyclical downturn,” said a former executive, who left last year. “They’re just trying to keep investors happy, and pad their bonuses before they parachute out.”
Traditionally, GameStop’s most profitable activity has been trading used games. Customers sell old games to the company for store credit that they use to buy new games, and GameStop then sells the used games at high margins. But as customers turn to console makers’ online stores and PC digital outlets such as Steam and the Epic Games Store, this sector has contracted. Direct sales outlets like eBay and Facebook Marketplace generally offer better prices for used goods than GameStop does.
The company is doubling down on its efforts to find other high-margin activities, such as used hardware. The firm buys old consoles, smartphones, and tablets, and then refurbishes and sells them on, often to distributors overseas.
“Things have changed drastically,” said an assistant manager. “Our district manager is pushing tech trades, like iPhones and tablets, as well as [pre-order] reservations. No one cares about the games, or the customers, anymore. It’s obnoxious.”
Polygon has been shown evidence of target sheets that managers are required to fill out, demonstrating that they have given purchase quotes to 50 customers on their used phones every week, with five leading to a transaction.
“I would rather not ask every customer what kind of phone they have, who their carrier is, and how much memory is on the device in order to quote them [a trade price] while they’re in the store looking for a game,” said an employee.
Another employee said that in their district, failure to hit targets was punished with a warning, with three warnings leading to employment termination.
“If we aren’t hitting these company-set goals, we are getting written up,” said a manager who has been with the company for more than a decade. “They want us to hound customers about trading in their old cellphones and tablets. I recently had a visit from a senior manager who said that close [to hitting target] isn’t good enough. If you aren’t hitting the goals set, you are failing.”
Another store manager said that employees are required to collect contact information from 10 customers per day, info that is later used to pitch various services. That manager recently quit, citing stress and cost-of-living issues. Store manager salaries at GameStop start at $16 per hour, with additional wages based on locality and experience.
Employees in different parts of the U.S. quoted slightly different targets, and less serious consequences for falling short. But most emphasized how much the games retailer is currently focused on reselling cellphones.
An assistant manager said that last year, GameStop briefly attempted to dial back its notoriously aggressive sales techniques, previously known as “Circle of Life.” This was a long-standing company mantra on the importance of persuading customers to trade in old games in exchange for store credit. Employees also strongly encourage customers to join loyalty programs that come with various discounts and benefits, all of which are designed to drive more sales.
“I survived the Circle of Life nonsense,” said one manager. “That was a really trying time. About a year ago, things seemed to get better. In fact, there was a whole training bit about not overwhelming our customers with offers and giving them what they need versus force-fed offers.
“That lasted about a month, before the same old rhetoric came back. It’s particularly awful for the quiet customers, the ones who just want to buy their stuff and go. I keep having to hammer questions at them even though I can see they’re getting annoyed.”
One employee who left the company last year said: “[The company] would always make us shove promotions down customers’ throats. They would ‘coach’ us if we weren’t constantly bothering our customers by trying to get them to pre-order a game or sign up for a rewards card. I’ve never seen a company so focused on tracking an associate’s sales metrics and performance in a job that isn’t commission-based.”
Many of the employees we spoke to wanted to emphasize how much they enjoyed interacting with customers who simply wanted to talk about games. Many also said that employees are often diligent and dedicated to their work. “The employees are amazing,” said one manager. “They want to be helpful to customers but are so tied down by the district leaders and the targets they have to hit.”
A few said they still believe in GameStop as a central place in gaming culture. But a frequent refrain is that the latest corporate directives are impacting morale. “Corporate pushes a narrative of this ‘helping the customer find value,’ but it’s a very flimsy claim,” said an assistant manager. “There’s a level of distrust between the DL [district leader] and the stores. Our DL reviews the transaction records every week and will write down the exact number of transactions when we didn’t offer the full trade pitch, and will then take disciplinary actions for each of those employees.”
Like many retail outlets, GameStop has always dealt with a high turnover of staff. But senior managers never consider it a problem. “We still get 10 resumes every day,” said a store manager. “Training is minimal. Everyone can be replaced very quickly.”
“We’ve seen a dramatic decrease in foot traffic since this time last year,” said an assistant manager. “On average, there would always be at least one person in the store looking around. Now I go up to three hours without any customer interactions.”
Other store employees and managers echoed these experiences, noting that the recent holiday season had been noticeably less busy than previous ones. Another manager said that traditionally dependable areas of the business, such as pre-orders for franchise games, have dropped significantly in recent years. “I’d say the number of pre-orders we got for the last Madden were almost half what we’d have seen five years ago,” said one former manager.
Some noted that GameStop’s place in the local gaming community has changed. “Midnight launches used to be like block parties, especially for bigger titles like Call of Duty,” said a longtime employee. “We would have lines wrapped around the entire shopping center with music, food, and the games running on multiple TVs. But as the years went on, they got smaller and smaller. The last few struggled to attract 20 people. Most people are buying digitally, or having the game shipped to them.”
Some employees said that GameStop is so focused on pre-orders that it sometimes fails to send any unordered copies of games to stores. Pre-orders are guaranteed sales, so there’s no lost cost in warehousing or shipping.
“Pre-orders are being pushed now more than ever,” said a manager. “We have to give every guest a sheet of upcoming games, while they shop, and then report how many of them we pass out daily.”
“GameStop is cutting down on inventory, meaning if a guest really wants a somewhat smaller title, they will most likely need to pre-order,” said a manager. Another noted: “They’ve changed the algorithm. We used to get an extra copy of a game for every three games that were pre-ordered. But now it’s more like one extra for every five games pre-ordered.”
“The reason we didn’t make sales [targets] over the holidays was because we ran out of everything: games and systems,” another manager said. “My store alone could have made a ton more money on Christmas week if we just had some systems in stock. I don’t know if this is because GameStop didn’t order enough or if it’s because [the console companies] weren’t meeting demand, but it hurt us.”
It’s not clear the extent to which stock restrictions are caused by game publishers and console makers, versus by GameStop. Polygon sent the company a request for comment on this story, and did not receive a reply. But it’s clear that either the vendors or GameStop, or both, are less willing to ship units to physical stores, which suggests a lack of confidence in retail’s ability to shift unsold stock.
GameStop’s problems are rooted in massive shifts in how games are consumed. Young players, especially, are less interested in big new releases than in service games that directly engage them on an ongoing basis with frequent content drops.
“Fortnite is killing the gaming industry,” said one manager. “More than half of every gamer under the age of 18 plays Fortnite almost exclusively, so foot traffic is down. We sell V-bucks [Fortnite’s in-game currency] but they almost never buy other games now.”
GameStop sells a lot of cards with currency for digital game shops. These are not high-margin goods, but they take up very little space in-store, so the company sees them as good earners. However, they tend to drive customers toward digital retail outlets.
“I warned them years ago that selling digital cards is a mistake,” said a longtime store manager. “They don’t even make much profit, but they generate a lot of [revenue], and that looks good on the balance sheet.”
One former manager at GameStop’s corporate office said: “They’re making short-term profits out of selling cards and codes, but it’s at the expense of their own future. They’re inviting the digital storefronts in to eat their lunch. It’s not sustainable.
“Once customers are comfortable with buying digital, they don’t go back to physical goods,” the former corporate manager continued. “There’s no used games market in digital, but the prices are too competitive for physical retailers. I think their customer base is shrinking to just parents buying retail cards or merchandise, and those guys who buy Madden or Call of Duty every year, and nothing else.”
A former executive said: “Ten years ago, younger demographics came in to trade used games. But they’ve grown up now and are buying online. Unfortunately, the new generation behaves differently. They grew up on iPads, touching a screen to download content. They aren’t interested in going to a store to buy a used game.”
The executive added: “I also think GameStop’s pricing is seen as predatory. Why would anyone buy a used game for $5 less than a new game, especially if they know the company is paying much less to buy that copy? There’s a lot of math that goes into the pricing of used games, but it’s not a good look.”
Time and effort
Many of our sources said that GameStop had cut hours for staff, including time previously allocated outside opening hours for organizing store shelves and displays.
“This results in a store that always feels unorganized and dirty,” said one manager. “Now there’s often just one employee in the store. Between dealing with guests and doing the absolutely mandatory stuff [corporate] demands, there’s no time. This accumulates in feeling overworked, underpaid, and a store that looks like you have given up and don’t care.”
A manager said that before she left the company, she sometimes felt unsafe. “The district manager told me to cut hours. I was opening and closing the store alone. I don’t like leaving the other employees to open and close on their own, so I did it.”
Merchandise sales are a success for GameStop these days, according to retail managers, who say that sales of plushies, statues, and clothing are all up. “People love buying stuff related to their favorite games and shows,” said one manager.
“The focus shifted from video games to collectibles, because when you sell a new game, it’s only like a 20% profit,” said a former manager, “but collectibles is 50%.”
But while the company is cautious about shipping physical games to stores, its reaction to merchandise can sometimes be overzealous. “If we sell one item, we immediately get shipped a ton more to replace it,” said an employee. “These items sit moldering. I think the buying team [at corporate] needs to calm down.”
Some managers noted that they had received lots of collectibles in-store, many of which go unsold. “I think they’ve bought too much stock,” said one. “I had boxes of [Funko] Pops in my storeroom that were going nowhere.”
A small number of the employees who contacted us were angry about media portrayals of GameStop as an avaricious company, or one that is facing extinction. Judging by anecdotal evidence, GameStop staff members are frequently subjected to rudeness and abuse by customers, which is sometimes fueled by negative coverage of the company, especially on social media.
“I really want to get a fair representation of GameStop out there,” said one manager. “I don’t think we’re all bad. We try to do an awful lot of good. I think [senior managers] have excellent intentions and are trying their best to try to steer us in that direction.”
But almost all the employees Polygon spoke to expressed a broadly negative view of the company’s strategies, and its prospects.
“They don’t listen to the employees,” said one. “We need managers who have actually worked in the stores who listen to the store managers. I worked for [a failed retail chain] in its last few years, and while we’re not there yet, I definitely see some warning signs.”