Archive for the 'Service retailers' Category

Should customers pay extra for service?

RetailWire recently posted an online discussion — about whether customers will pay an upcharge for customer service — that triggered plenty of comment. My perspective follows, and it is based on the idea that there is more than one way to define “service”:

To answer the question, you have to define “customer service” differently for different kinds of retailers. Customer service at Nordstrom means “high touch” and the SG&A cost of providing it is covered by high merchandise gross margins (or it should be). Conversely, expectations of “customer service” at Target are totally different — shoppers expect store shelves to be well-stocked and checkout lines to be efficient. Again, this lower-expense model is reflected in tighter merchandise margins.

My point? Customers are already paying for the “customer service” they seek in the stores they choose, based on the “cost of goods sold” that they are willing to pay. Any surcharge imposed by retailers to meet or exceed these expectations (hidden or otherwise) would be a bad idea.

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What can retailers learn from the United fiasco?

Like everybody else, RetailWire panelists enjoyed a chance to speak out about the well-reported United Airlines incident, in which an overbooked passenger was dragged off the plane. The question I try to answer, below, is “What can retailers learn from this?”:

Consumers have choices of retailers, just as they (often) have choices of airlines and other service providers. One of the lessons that any customer-facing business ought to take away from the United fiasco is the need to empower employees to look past the policy manual when it’s time to exercise some good judgment. (In the case of United, it would have been easier to seek volunteers for rebooking instead of working from a mandatory list.) Policies are meant to protect a retailer’s assets and to manage risk, but they shouldn’t turn into a roadblock to common sense.

And the second lesson learned: If your company hasn’t learned the power of viral social networking by now, you’d better get your communications act together fast. Above all, don’t blame the consumer for your own missteps.

CVS vs. Walgreens: Who’s easier to shop?

Upon reading a RetailWire discussion about new store merchandising initiatives at CVS, I weighed in with some recent observations of my own:

Given a switch of insurers last January, I’m shopping less at Walgreens and more at CVS. I’ve always had a problem with the navigation issue at Walgreens: It’s just as difficult to find things in my newly remodeled neighborhood store as it was before. And the overassortment of categories having nothing to do with health and wellness may be good for Walgreens’ position as the “neighborhood convenience store,” but it certainly doesn’t help the customer figure things out.

The competing CVS is noticeably easier to shop, with wider aisles and better directional and product signage. If the company takes its execution to the next level — as reported — it could be part of a broader competitive advantage over Walgreens.

Can restaurants eliminate the “tipping culture”?

Danny Meyer, CEO of Union Square Hospitality Group, is considered an industry leader and is taking a bold step in his higher-end NYC restaurants like Gramercy Tavern. He is raising menu prices and also eliminating the expectation that the customer will leave a tip. The service charges (meant to be shared among both servers, cooks and others) will be reflected in the higher prices. The question (discussed at RetailWire) is simple: Will it work?

If Mr. Meyer raises prices by, say, 20% but no longer expects customers to leave a 20% tip, will they see any big difference in the tab? Probably not. But American diners are trained to acknowledge good or excellent service and may find it hard not to leave some extra cash on the table. Even in European restaurants where a service charge is included, I usually “round up” anyway.

The economics are interesting, because it’s clear that the “back of the house” workers — from chefs to dishwashers — are short-changed by the current system. At the same time, Meyer may need to raise “front of the house” wages significantly to offset the loss of servers’ tip income. I’m sure there will be a shakedown cruise at USHG restaurants before the new model is widely adopted.

Target expands its “Geek Squad” partnership

I’ve commented before — along with other RetailWire panelists — about the test expansion of Best Buy’s “Geek Squad” concept to Target Stores. Apparently the results justify the program’s expansion. Here’s my point of view:

I can easily see this partnership being expanded to other stores. It provides a level of service and tech credibility for Target that will help it become more competitive with Walmart in the CE space. And it takes a key asset of Best Buy to a well-trafficked discounter when its own big-box stores are undershopped.

To take the idea one giant step further, why not “Best Buy at Target” as an umbrella for the CE department?

Netflix continues to stall

From RetailWire, a recent comment about Netflix — a company staking its future on video streaming but facing increasing (and more nimble) competition:

Netflix is the “big box store” of video streaming, and I would equate competitors like Apple and Amazon with “warehouse clubs” in the business of selling multiple categories. And Netflix continues to struggle with poor selection of movies and video compared to its bigger, more nimble competitors. If you want to catch up on season 1 of “Homeland,” good luck with Netflix — I am doing my viewing on Amazon Instant Video, and I’m sure they are glad to collect more revenue and data from me.

Best Buy: New sheriff in town?

To continue the thoughts from my last post about Best Buy, here are my RetailWire comments about the hiring of a new CEO:

In theory, an outside hire is just what Best Buy needs right now. The takeover attempt being orchestrated by Richard Schulze and his team (including one of his ex-CEO proteges) was not likely to be as transformative as the company’s issues demand. However, it’s too early to declare that “months of uncertainty” are over, as long as Schulze still has an opportunity to stir things up.

Joly brings an interesting background to Best Buy, with experience in the tech industry and (perhaps more relevant) the hospitality industry. Best Buy’s forgotten legacy is great customer service, and if the company is to survive it needs to compete on a level playing field with The Apple Store. Joly should bring a fresh pair of eyes to the challenge.


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