Filed under: Customer Feedback
Been noticing any bare spots in the retail landscape lately? Well, expect to see lots more—especially with the economy tanking. Here’s the box score to date:
The once ubiquitous CompUSA was pulled up by its roots in December. A venture capital firm bought the remnants for salvage and promptly closed the remaining stores. The chain started imploding last summer, as customers bought only sale items and ignored full-price goods—partly a result of horrible employment practices that beat employees to a bloody pulp. In fact, the pressure on employees to move merchandise became so extreme that it created the perverse effect of customers who wouldn’t buy at regular prices becoming “the enemy” for some employees. But another contributor was employees not being able to spell the products they were selling.
Circuit City, once at near parity with its category competitor, Best Buy, has been left in the dust. Worse yet, the company is hemorrhaging cash at an alarming rate. To add to the turmoil, the board just gave the heave-ho to the dim light bulb CEO who fired all the experienced sale staff last year to save money. The new CEO won’t have much time to turn things around, but there’s no replacement lined up. And the new sales recruits, fresh from flipping burgers (or from CompUSA)? They can’t sell squat, which led to this delicious headline in the January 3 “Information Week: ”Clueless Circuit City Scrooges Itself Out of Christmas Sales.” Way to go, IW.
Sprint makes the list after announcing on January 18 that it would lay off 4,000 more employees and shutter some 120 retail stores. Sprint’s business customer base seems relatively stable, but consumer customers are fleeing like ships leaving a sinking rat. And no wonder. Consumer service is atrocious. Rate plans aren’t competitive. And the company, which also has a new CEO, is focused on cutting costs rather than finding out what’s wrong on the customer side. That’s what happens when number crunching, C-level execs treat customers as statistics—as if they’re a fixed value in a rapidly deteriorating equation.
Who’s next in line? Chrysler’s a good candidate. Actually, Ford could be too. So are several retail and investment banks with sufficient hubris to believe they could whip ether into profits, as in make something from nothing. Northwest airlines won’t totally tank, but it’s too weak to stand alone, and the brand’s about to disappear. Radio Shack? A possibility. Macy’s? Sears?
What really fascinates me is what all these retailers have in common. They all built powerful brands—then tried to survive on brand strength rather than responding to customers. They advertised their brains out and relied on fooling and manipulating customers, without grasping that customers will decide their fate based on their own perceptions¬—which all the brand advertising they can shovel out won’t influence.
For years customer advocates have been preaching the gospel of customers ascending the dominant position in buyer-seller relationships. But business wasn’t listening. Now, the gospel’s getting very hard to ignore. Nonetheless, the carnage will almost certainly worsen over the next five years—and not just in retail, but in B2B as well.
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