Category: Retailing

Meeting Expectations of the Cyber Customer

Today is Cyber Monday, the date in the Christmas shopping season that shoppers flock to e-commerce sites to continue the shopping many people began on Black Friday. An estimated 72 million people will be Cyber Monday shoppers, up from 61 million in 2006. The growth in consumers willing to do their holiday shopping online presents tremendous opportunities for e-tailers. Unlike their brick-and-mortar counterparts, e-tailers can draw customers from all over the world.

Being presented an opportunity to profit from a growing number of online holiday shoppers is one thing, being prepared to take advantage of the opportunity is another. E-tailers have been known to frustrate shoppers and miss sales due to web sites that crash under increased customer traffic. More experienced e-tailers likely have prepared for this possibility, but a newer business may have to experience that growing pain first-hand to learn the lesson. Also, are order processing procedures well designed and executed? This aspect of the e-commerce transaction is as critical as the salesperson-customer interaction is for brick-and-mortar retailers. An order that is delivered on time and mistake free is the customer expectation that must be met. Anything less can lead to dissatisfied customers who might take their business to other e-commerce sites on Cyber Monday 2008. Link

Keeping a Lid on Black Friday Sales Information

Black Friday is near. The day after Thanksgiving is very critical for retailers as the Christmas selling season moves into high gear. It is called Black Friday because historically it marks the time of year that retailers move into the “black” of profitability for the year. A major part of a retailer’s Black Friday success is tied to its sales and other promotions designed to generate store traffic. Wal-Mart, like other retailers, spends heavily to promote Black Friday. The retail giant differs from other retailers in its policing of information about its Black Friday promotions.

Web sites such as bfads.net, BlackFriday.info, and Black Friday 2007 give consumers information about retailers’ sales on Black Friday. These web sites post information sometimes about sales that have not been released to the public. The informaiton is obtained from a retailer’s employees or an employee of a printer producing the promotional materials, or some other unauthorized source that has access to information about a promotion. Wal-Mart has communicated with some of the more prominent Black Friday web sites that it should cease and desist from posting information about Wal-Mart ads before they are released.

Wal-Mart is trying to protect its confidential marketing decisions for as long as possible. While the company will not score any points for its brand image by unleashing its legal department on Black Friday web sites, the efforts to suppress the information almost seem futile. Retailers can react and adapt to competitive actions faster than ever thanks to the availability of the Web as a communication channel and a platform for selling products. If competitors and consumers find out about Wal-Mart’s Black Friday promotion plans a few days early, little can be done to derail a competitor at that point. Product orders for the Christmas season are placed months ahead of time. The major marketing decisions for the holiday season are in place, and advance information about a short-term promotion is unlikely to be a determining factor in a retailer’s success for the Christmas season. Link

Gift Cards not Consumer Reports Choice for Perfect Gift

I love gift cards- love to get them, love to give them. I like getting them because a gift card gives me a “kid in the candy store” feeling. I get to go to a store and pick out something for me! I like to give them for the same reason- I want the recipient to enjoying picking out something and not get stuck with a gift they may not want. Gift cards have become BIG business for U.S. retailers as we spent an estimated $80 billion on them in 2006.

So why is Consumer Reports going after retailers and the gift card business? They have released a report critical of gift cards. Among the negative points raised by Consumer Reports is that more than 25% of gift cards given are not completely redeemed. This behavior (or lack of behavior) by consumers results in retailers enjoying an estimated $8 billion windfall… all revenues, no expenses!

The argument that gift cards mainly benefit the retail industry is off base. The responsibility for consumers not redeeming gift cards rests solely with the people holding the cards, not the stores that sold them. Prime reasons that people don’t redeem gift cards are 1)they lose them and 2) they simply forget they have the gift card.

I would rather have a gift card than an ugly sweater any day. That reminds me, I have some gift cards from last Christmas floating around my sock drawer. I’d better use them so I won’t become part of the argument Consumer Reports uses against the gift card industry! CR does a lot of good for consumers; its efforts could better serve consumers in areas other than the giving and receiving of gift cards.

Movie Rental Battle Is On!

An intense battle has taken shape in the movie rental category. Blockbuster took command of the movie rental market through its brick and mortar presence throughout the country. The consumer buying process was shaken up when Netflix introduced a rent-by-mail approach. The convenience of having movies show up in the mailbox and more recently the ability to download some movies onto PCs allowed Netflix to grab market share from Blockbuster. The industry leader was starting to look like the industry dinosaur. Blockbuster has fought back. It has rolled out a mail delivery model similar to Netfilx, and this week the company announced the acquistion of Movielink, a firm offers movie download service via PCs.

Blockbuster’s recent moves are a signal that it is refusing to concede the online market for movie rentals. Customers of the two companies should be the winners in this battle, as both companies will likely be aggressive in pricing to lure customers. Also, customer service and product assortment should receive greater emphasis as each company looks to create a competitive advantage over the other. And, don’t count out cable and satellite television providers. They will make a play for customers, too, no doubt touting their advantage of on-demand delivery capability rather than waiting for a DVD to arrive via mail. Link

It’s the Execution, Stupid!

A recent study by Carlson Marketing and the Peppers & Rogers Group provides insight into what consumers value from retailers. In the report, “Getting it Right at Retail,” respondents rated customer service and being “easy to do business with” as very important attributes in a retailer. These service issues, along with price and availability of merchandise, were of great importance to the consumers surveyed. Retailers should be concerned with another finding from the study: over 40% of respondents indicated they were as happy with other retailers as they were their primary retailer choices. In other words, many customers have little problem with switiching to other retailers when their primary retailers do not meet their expectations.

Results of the study are interesting, but are they really surprising? Consumers want to be treated fairly and and have their business valued by retailers. I doubt companies like Wal-Mart, Auto Zone, and Macy’s that scored low with consumers in this study have set out to create bad experiences for their customers. It’s all about execution, or lack thereof. For example, another finding from the study is that many times retailers that have well conceived loyalty programs do not effectively implement them as front-line service employees are too often ignorant of these important customer programs. This problem is not new for retailers; employee turnover in retail organizations has been high for years. A mixture of low salaries, being put in stressful situations dealing with difficult customers, and the saturation of retail outlets that necessitates filling more positions (that are low paying and stressful) has contributed to the customer service woes experienced in this country. Retailers willing to invest in employees in terms of training and compensation are poised to develop a competitive advantage, assuming other elements of their strategy are in place (e.g., merchandise mix, pricing, and presentation/experience). Link