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June 2007

Customer Dissatisfaction!

There have been a number of studies over the years into what customers want, what makes them happy, and why they shop in certain stores. But there have been very few studies identifying what leads to customer dissatisfaction and why shoppers quit patronizing particular stores. Information and insights into what dissatisfies customers can be just as valuable as knowing what satisfies customers.

In 2006 and again this year, the Baker Retailing Initiative Group at Wharton School, University of Pennsylvania, set out to study what provokes consumer dissatisfaction in retail stores.

The research, conducted by The Verde Group, addressed the following three questions.

1. What problems are shoppers encountering at brick and mortar retailers?
2. Which problems are most likely to generate negative word-of-mouth?
3. Which problems are most likely to place shopper loyalty at risk?

The survey consisted of telephone calls to randomly selected American consumers between March 9 and 19 of this year. Qualified participants had to have made purchases at a retail store in the last month. Purchases of liquor, groceries, prescription drugs, and items costing more than $2,500 were excluded.

At the very heart of the results from this study is this line from Verde's findings...

"Sales associate issues are most detrimental to retailers. They annoy the most shoppers, lose the most business for retailers, and drive the most negative word of mouth."

This cannot be a surprise to most retailers, and it certainly isn't a surprise to anyone who spends time shopping.

I've been doing some work in the furniture business recently and have spent a great deal of time in furniture stores. While visiting an area served by several furniture competitors, I entered a store and wandered around for about ten minutes. Ultimately I came upon an area with several desks apparently for use by the sales staff. Two women were seated there working and talking with each other. As I passed by, one looked up and asked if she might be able to help me.

Because this area is in the very back of the store without direct sight to the front door, one could easily blame this less than impressive service on poor store design. Or it could be due to a lack of initiative on the part of these two sales associates. But the true blame here is on management.

Whatever these two sales associates were doing couldn't possibly be more important than getting up from behind their desks and helping a customer. This kind of thing happens because management doesn't sufficiently communicate the absolute priority of the business--serving customers!

The Wharton study revealed some very important, yet simple, issues that continue to cause problems for retailers. The study found that Sales Associate issues have a far greater impact on shopper loyalty than Store issues including policies and procedures or out-of-stock problems. Sales Associate issues include customers not being able to find someone to help when needed; customers being ignored; associates not saying "hello" or making eye contact with customers; and associates not taking steps to quickly help customers waiting in long check-out lines.

One third of the Wharton study participants said they couldn't find sales help when they needed assistance. While most retailers already know this is a problem, some of the nation's largest retailers continue to reduce the number of sales associates they have on the floor serving customers.

Here's an unsettling finding from this study, six percent of all customers lost is due to lack of sales associate availability. Can any retailer afford to lose customers simply because someone isn't around to help? Retailers work hard at generating the most volume they can. If solving this problem potentially could add six percent to your sales volume, why wouldn't you want to do it.

UNHAPPY CUSTOMERS TELL EVERYONE!

To make this problem even more troubling, unhappy shoppers then go out and tell their friends, neighbors, acquaintances, and virtually anyone who'll listen about their poor experience in a particular store. The study found that fully one third of all shoppers tell four other people about shopping problems. To add to this pain, half of all shoppers choose not to visit a particular store because they heard about someone else's bad experience there.

Okay, so you have this situation that causes customer dissatisfaction. What can you do to fix the problem? It might seem just a little too basic, but first you must recognize you actually have a problem. That is the place to start. Then start paying attention to customers who walk out the door without buying. I suggest someone in management spend at least two to three hours a week outside the door talking with customers about their experiences. You will be amazed at what you find out. If customers aren't able to find sales help, they will tell you.

Yes, there are perfectly good reasons for some customers to leave without buying. But one of those reasons should not be because they couldn't find a sales associate. And it shouldn't be because the sales associate wasn't doing his or her job. If this is occurring in your stores, you may need to look at how you schedule your people. It also may be time to hire additional associates.

A CUSTOMER-FOCUSED CULTURE!

The second step is to take a hard look at the culture of your business. Have you created a culture where serving the customer is the most important part of everyone's job? Do your associates understand that customers come first before anything else? Do they know that every customer should be warmly greeted. Do they know that greeting every customer must also include a genuine and sincere smile?

This may seem like Retail 101, but the fact is, customers go into stores every day and can't find someone to help them. They go into stores and are ignored. They go into stores and encounter sales associates who are too focused on other tasks. They go into stores and come in contact with sales associates who don't take the time to even greet them. They go into stores where the sales associates are dour and surly.

They also walk out the door of those stores and tell an average of four people about their negative experiences. Walt Disney once said; "People spend money when and where they feel good." Are you and your people doing everything possible to make sure every customer feels good?

To get the complete study results or a free executive summary of "2007 Shoppers At Risk: An Annual Study of Retail Dissatisfaction," go to www.verdegroup.ca.

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LET THERE BE LIGHT!

If you've been in one of Hot Topic's 700 mall stores around the country, the experience likely was a little strange unless you are 12 to about 20 years old. Oh, and you're into Goth-oriented merchandise and prefer shopping in stores with black walls and a dungeon-like feeling. Well, that is all about to change as the company transforms its stores by lightening the walls, brightening the lighting, and adding flatscreen TVs. Sales in stores where the changes have already taken place are increasing. That's very good news for Hot Topic since sales have been sliding for nearly three years.

BEATING HURRICANE SEASON!

The folks at Winn-Dixie Stores in Florida announced this week they would install giant generators in 66 of their stores in Palm Beach, St. Lucie, and Martin Counties. The diesel-powered generators will allow the stores to keep their lights on and freezers running during severe storms that often hit the state. Winn Dixie competitor Publix Super Markets did the same thing last year adding generators to hundreds of its stores. Seems like a good idea since Publix hauled away $60 million dollars in spoiled food when Hurricanes Frances and Jeanne attacked Florida in 2004.

DID YOU BUY YOUR WEDDING GOWN
AT TARGET?

Yes, Target has done a great job selling Michael Graves toasters and Isaac Mizrahi fashions, so now the company is selling under $200 wedding gowns on its web site. Can Target sell wedding gowns?

In today's new world of shopping, consumers think of getting a great bargain as a badge of honor. I don't think there's any doubt Target can be successful selling wedding gowns. Hey, for many consumers shopping at Target is cool!


HOW TOUGH IS THE CONSUMER ELECTRONICS BUSINESS?

In just the last few months, Circuit City announced two major layoffs and CompUSA closed nearly half its stores. This week, Boston-based Tweeter filed for Chapter 11 bankruptcy. For many years Tweeter operated high-end audio-video stores in New England. A few years ago, it started to expand by buying up smaller, regional high-end audio-video chains creating a national chain in the process.

It has always been difficult to integrate one company into another. It is staggeringly difficult to integrate eight companies into one cohesive business. Tweeter attempted to do just that over the last ten years. Now, operating in bankruptcy, it will be interesting to see if Tweeter can survive.

Until next month...

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Into the Future: Powerful Trends Shaping the Future of Retailing

Understanding retail and consumer trends gives retailers the tools they need to prepare for the future. It gives them an upper hand to make sure they are in the right place at the right time with the right merchandise. Success doesn't come by chance.You have to make it happen. And in the retail industry, it means satisfying the wants and needs of consumers. But what they want today is not necessarily what they'll want tomorrow. With an awareness of marketplace and consumer trends, retailers can plan for tomorrow before it's too late.

After extensive research, George Whalin has compiled his findings and put together an energetic, enlightening, and entertaining keynote presentation entitled "Into the Future: Powerful Trends Shaping the Future of Retailing." Some of the trends are real eye-openers, some are even shocking. All of them give retailers the insight needed to attack the future and win!

Time is of the essence. Put this on the agenda of your next convention, conference, trade show, or expo.

For details on this and other convention and trade show topics, go to our web site or call 800-766-1908.

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Seminars and Training Programs for Managers and Associates

Delivering performance-enhancing speeches and seminars for retailers since 1987, George jam-packs his presentations with practical, real-world information. His seminars for managers and associates teach store management skills, customer service improvement, and sales techniques. If you want to improve store productivity and profitability in 2007, we encourage you to call George Whalin. Don't wait, his calendar fills up quickly.

Topics for managers' meetings and corporate conferences:
(Click on a topic for details)

Great Store Managers Make Great Stores!

How to Find an Eagle in a Flock of Turkeys! Finding, Hiring, and Keeping the BEST Retail Employees

Customer Focused Selling

Every Customer Every Day!

For more information go to our web site or call 800-766-1908.

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Resources for Retailers

George Whalin's book RETAIL SUCCESS! is now in its eighth printing. A number of consumer products manufacturers have purchased the book for their retailer customers. Retailers have provided copies for their managers who regularly refer to portions of the book in their managers' meetings. And managers are referring to the book in their daily store meetings. If you haven't purchased a copy yet, what are you waiting for? For multiple copies, call us for volume pricing. For individual copies, there are also some very good deals to be had at amazon.

Go to our web site today where you'll find several other books in addition to RETAIL SUCCESS that George recommends. Check it out often, he keeps adding to the list.

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After a slow start, I am now updating my blog on a regular basis. If you have an opinion or thoughts about any of the topics, I invite you to post your comments at retailerblog.com It's easy to do. And if you have a topic you would like to see addressed and discussed on the blog, send me an e-mail at george@whalinonretail.com.

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In addition to speeches and seminars, George also consults with retailers helping them improve the operation of their businesses. His consulting services include helping retailers with strategic planning issues, marketplace positioning, merchandising and store layouts, developing results-driven marketing and advertising programs, personnel management, and improving store performance. If you need solid, practical, proven insights and ideas to grow and improve your business, call us toll-free at (800) 766-1908.

We encourage you to pass this publication along to your associates and colleagues. If all or any portion of this newsletter is reproduced in another publication, attribution should read as follows: Copyright 2007. Reprinted with permission from George Whalin's Retail Management E-Letter. To occasionally reprint portions of this newsletter one time, no express permission is required. To reprint in more than one venue or multiple articles, please contact us at 800-766-1908 or info@whalinonretail.com.

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