How Retailers Fail

Let’s make the shopping experience miserable and expect people to come back for more.A crowd of shoppers browse at Target on Black Friday.

There is a long list of retailers either closing stores or closing entirely.  However, the population is growing and people still need clothes.  So what gives?

“Let’s blame Amazon.”

Ok, store traffic is down, that’s true.  Why is it down? One analysts asserts that stores are failing to convert the visitors they do get into customers (2).  Amazon is responsible for that?

“The Internet is more convenient.”

For some things that’s absolutely true — software, for example.  Why buy a disc in a store (if your PC even has a drive in which to insert it), when you can download what you need and get the version with the latest updates?  However, clothing is a different animal.  Almost half of all clothes purchased on the Internet get returned because they don’t fit.

Overall, more than 30% of Web purchases get returned to the retailer, as compared to less than 9% of store purchases (3).  Further, consumers are more likely to buy online if they can return the product to a store.  So how exactly is that more convenient than buying the product in the store and getting it right the first time?

When retailers are suffering, how does Barnes and Noble show stable store sales and declining online sales? (4)

The answer is pretty simple.  It’s called “the shopping experience”.  From a 2009 study, there are 5 key elements in making a great retail experience (5):

  1. Engagement: being polite, genuinely caring and interested in helping, acknowledging and listening.
  2. Executional excellence: patiently explaining and advising, checking stock, helping to find products, having product knowledge and providing unexpected product quality.
  3. Brand Experience: exciting store design and atmosphere, consistently great product quality, making customers feel they’re special and that they always get a deal.
  4. Expediting: being sensitive to customers’ time on long check-out lines, being proactive in helping speed the shopping process.
  5. Problem Recovery: helping resolve and compensate for problems, upgrading quality and ensuring complete satisfaction.(5)

Retailers spend on item 3.  But they don’t spend on staff — and the other four items all depend on the dedication and professionalism of the people with direct face-to-face contact with customers.  The Front Line.

Barnes and Noble stands as an exception.  The staff is smart and they know books.

In fact, retailers dominate the list of companies that pay the lowest wages in the US (1).  These stores treat employees as expendable and accept turnover rates approaching 100% per year.  What does that do to customer service?  The employees don’t know the merchandise and don’t have an emotional investment with the company.  The customer can’t build an ongoing relationship with a  salesperson, because the salesperson won’t be there next time the customer visits.

That’s not the way retail used to work.  It’s also why clothing boutiques can flourish when chain clothing retailers are suffering.  It’s not that the chains couldn’t do this.  It would mean reallocating money from CEOs and investing in employees.

What retailers are showing us is that you cannot succeed if you treat your Front Line like cannon fodder.


Sources:

  1. http://247wallst.com/special-report/2016/09/30/companies-paying-americans-the-least-5/?utm_source=AOL&utm_medium=CPC&utm_content=companies-paying-americans-the-least-5&utm_campaign=AOL
  2. http://www.businesswire.com/news/home/20160913005288/en/Retail-Traffic-Hemorrhage-Unacceptable-Excuse-Poor-Results
  3. http://www.business2community.com/infographics/e-commerce-product-return-statistics-trends-infographic-01505394#deB0ulx2rbvuZW4j.97
  4. http://fortune.com/2016/03/03/barnes-noble-results/
  5. http://www.forbes.com/2009/07/13/retail-customer-service-entrepreneurs-sales-marketing-wharton.html
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