Buy, Sell or Trade

I began working in videogame retail as a lowly clerk, or Media Specialist, as management deemed more professional. My only concerns were keeping the shelves organized, not getting caught playing games and avoiding the man who mistook his sock for a wallet. That was five years ago, and now that I manage an independent location, my perspective has changed. Each game on the shelf represents my ability to pay for food, rent and games of my own, but sometimes, it hardly seems worth the effort.

Gaming is an expensive hobby. While price doesn’t enter into the equation for some people, others are stricken with perpetual sticker-shock. Every day, I hear customers scoffing at $60 price tags, often followed by a hushed “Let’s go to Wal-Mart.” Wal-Mart may have cheap toilet paper, but the price-cutting smiley face barely touches games. Some large retailers offer cheaper prices during release week, but only because they know you’re likely to walk out with other stuff you come across as you navigate their labyrinthine aisles.

On a $60 game, an average retailer’s profit is only $2-8. That may be respectable in other retail environments, but other retailers are not constantly looking over their shoulders for price-drops. A game like Halo 3 will hold its $60 price tag through Christmas of 2008, but most games only last a matter of weeks at their original price. It is not enough for games to sell; they have to sell fast. Otherwise, breaking even is the best a retailer can hope for. And when it comes to systems, which every manufacturer but Nintendo sells at a loss, breaking even is all retailers have.

This is why the units per transaction (UPT) metric has become the hottest buzzword among upper management at major retailers. They still care how much you the consumer spend, but they care more about how much you buy. Due to the margins between wholesale and retail costs, selling two games for $30 each is actually twice as profitable as selling one game for $60. UPTs are also why you can expect to be offered extended warranties, magazine subscriptions and a plasma TV before you reach the exit.

Some retailers are more cutthroat than others. GameStop employees, who until recently could have been fired for not making magazine and pre-order quotas, were obligated by their employer to be the worst. Some customers have even been turned away for not adding reservations or strategy guides to their purchases. When you work for a company that’s rumored to have had a 106 percent turnover on employees in 2006, you do what you have to, to survive.

Employees in the retail industry are motivated by fear – fear of a bad review, fewer hours or even unemployment. People look to clerks for specialized advice, but that expert knowledge frequently gets swept under the rug. Back in the day, I was reprimanded several times for not pushing products with higher margins even though they were vastly inferior. To protect myself, I adopted my own “Don’t ask, don’t tell” policy. If the customer didn’t ask for my opinion, I didn’t offer it.

Retailers are always devising new strategies to draw customers, and breaking street dates is one of the most brazen. Publishers often set strict release dates for games, and anyone breaking those dates risks losing future games from that publisher. Some retailers do it anyway, and word of the early release inevitably spreads like wildfire on the internet. Wal-Mart is notorious for this practice. They always attribute it to employee errors, but it happens on a suspiciously regular basis. Regardless of the company’s intent, though, breaking a game’s street date is a big man’s business. What publisher would restrict supplies to one of the largest outlets in the United States?

Not every game retailer is a big-box store, though. Every once in a while, some fool with a dream decides to strike out as an independent, but it’s almost Sisyphean. With only a handful of small-scale distributors available, independents can always count on lower volumes at higher wholesale costs. Factor in the lack of brand recognition, and the only hopes an independent has of succeeding rest with customer loyalty, an amazing location or a viable niche. So far, my store has had the good fortune of all three.

We sell the occasional new game, but staying competitive in the market is hardly an option. Even when a new release does arrive on time, customers incorrectly assume we don’t have it, or that someone else has it for less. Like most independents, used games are the lifeblood of the business. Nostalgic collectors can flesh out their NES collections, modern gamers save $8-15 when buying used, and the store makes more profit from the disparity between the buyback and selling prices. It is a win-win situation, for now.

Keeping pace with technology is becoming increasingly difficult. A few years ago, when customers wanted a used PlayStation, I asked, “PlayStation 1 or 2?” Now the question is, “PlayStation 1, 2, 2 Slimline or PS3 with which hard drive?” When they want a used Xbox 360, I say a little prayer. We sold an average of one Xbox 360 per week last summer, and despite our best efforts to test them, all but one came back with the red ring of death. When used, defective merchandise appears, we have to suck it up and take the loss. No one is going to take pity on us; not the customer, and certainly not the manufacturers, publishers and developers that don’t see a dime from used sales.

People in the game industry are not the only ones who want the used market to disappear. Authorities in Utah and Florida have imposed stifling restrictions on used media stores; Florida stores to fingerprint sellers and purchase a $10,000 bond from the Department of Agriculture and Consumer Services. Rhode Island and Wisconsin should be following suit shortly. As much as I dread such actions, I can see why they are being imposed. I once joked that theft and used media stores were keeping the drug trade alive. Hang around any used media store long enough and you will notice the common sight of twitching heroin-junkies and toothless crack addicts hocking oddly pristine goods.

Perhaps I’ve painted an unfairly bleak picture of videogame retail, but then again, the business is rife with stress. Five years ago, I imagined my workdays filled with conversations with like-minded gamers. Instead, I find myself repeating the same pitch a dozen times, babysitting unaccompanied children and helping parents decide between Dogz and Catz. All that for a few dollars of profit. As much as I complain, I love what I do. When that one customer walks through the door, raving about the game I recommended, it all seems worth the hassle. In that brief moment, I get to be a gamer.

When not hawking games, Brian Rowe is a staff writer for HonestGamers.com and can be contacted at [email protected].