GameStop is about to find itself in the middle of a scandal if a leaked document outlining an unethical business practice proved authentic. This involves a program called Circle of Life, which forces its sales personnel to push customers into buying used products instead of new ones.
The program, which is being touted as an employee incentives scheme, even places employees at risk of termination for failing to peddle used software and hardware.
On Selling Used Items
While the program does not exactly command GameStop salespeople to sell used items, its purported sales policies definitely indicate immense pressure to sell preowned merchandise over new stocks.
The company executes this in the breakdown of its sales quotas for each store, which include preorders, reward card subscription, used items, and trade-ins.
Now if a customer purchases a brand new item and nothing else, the store will have to sell more used items or those other items in other quota categories to meet the minimum requirement.
"We are telling people we don't have new systems in stock so we won't take a $300 or $400 dollar hit on our pre-owned numbers," a GameStop employee said in a Kotaku report. "We also tell customers we don't have copies of new games in stock when they are on sale — for example, Watch Dogs 2 is currently $29.99 new and $54.99 pre-owned. We just tell them we don't have the new one in stock and shuffle them out the door."
The source has also revealed that the program has been implemented throughout GameStop stores since last year. Target quotas reportedly vary from store to store. The controversial scheme only surfaced at this point because the company is said to be aggressively pushing for it this year.
Quota Or Termination
With respect to the issue of termination as punishment for missing quotas, the process is quite brutal. According to Kotaku's report, employees are allocated scores for the previously mentioned four quota categories, each labeled as "COL." Each COL represents 25 percent so, if a salesperson fails to sell the minimum number of used items, his total score will get a 25 percent deduction.
GameStop management is now said to be monitoring each store closely and enforces 75 percent COL score requirement. As the numbers get tallied each month, employees who fail their quotas could be promptly shown the door.
This is the reason GameStop employees are now dreading the introduction of new games like the plague. For example, the brisk sales of the Resident Evil 7 have sent employees scrambling to sell preowned items to cover for the discrepancy in their COL numbers. These conditions lead aggravated salespeople to lie to customers.
"Why would I sell you a new game that you're excited about if it's going to hurt my numbers at the end of the day?" an employee grumbled.
GameStop has not disputed the Circle of Life program and its alleged quota system yet. In a response sent to Kotaku, it merely reiterated its commitment to provide best value to its customers for purchases that include used merchandise.
Some observers are now saying that the business practice is dangerously teetering toward the erosion of the GameSpot brand.