Loyalty: Bigger Than A Program

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Apr 26, 2004
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By John Hennessy


Things were going great for Eckerd in their hometown of Tampa back in 1981. An opinion poll taken at the time indicated that eighty-three percent of county residents had visited
an Eckerd location within the prior month. Walgreens, by comparison, ran a distant third with only 18 percent.


Furthermore, about two-thirds of the Eckerd customers said they were, “So loyal that they shopped at no other drug store.” Second place in that category: Albertsons Southco Inc.
with only 5 percent expressing similar loyalty.


How things change. As Chris Tisch, writing for the St. Petersburg Times, put it, “More than 20 years later, plop plop fizz fizz: the bond between Eckerd and its customers
has dissolved like an Alka-Seltzer tablet. Only 44 percent of Tampa Bay area customers polled in 2003 said they had visited an Eckerd in the past month. That is less than Walgreens
and the pharmacies in local Wal-Marts.”


Market erosion like this undoubtedly led to last year’s decision by parent company J.C. Penney to put Eckerd on the block. The resulting $4.525 billion sale agreement with CVS
and the Jean Coutu Group of Canada forged this month could be considered a major victory for Penney’s, but may ultimately mean the dissolution of the Eckerd brand.
(See RetailWire 4/5/04 – Eckerd Finally Sold.) https://retailwire.com/Discussions/Sngl_Discussion.cfm/9771


So what happened? Tisch attributes much of the decline of Eckerd in Tampa to failures of loyalty. Not loyalty as in a card program, but loyalty defined as failing to understand
and consistently deliver what your customers want.


Examples:



  • Walgreens invested in technology over 20 years ago to link its stores. This investment resulted in the ability for a Walgreens customer to fill a prescription in any Walgreens
    store. Eckerd has plans to link stores some time next year.

  • Walgreens adopted convenient, freestanding stores early. Eckerd stayed with it’s crowded mall locations.


“Now the only thing anybody builds is freestanding stores,” said Britt Beemer, president of America’s Research Group in Orlando.


Tisch also points to Eckerd’s failure to execute on basic service levels. Perhaps Eckerd management thought having a college and performing arts center sporting the Eckerd name
was enough. It doesn’t appear they gave much consideration to training, customer service levels, operations or supply chain.


The conclusion of Tisch’s piece is that you can’t rely on location and history. You need to keep pace with — if not get ahead of — both what your customers want and what else
is being offered in the marketplace.


The only surprising part of this well-researched article is that those running a once great chain like Eckerd could think otherwise.


Moderator’s Comment: Are most retailers doing everything they should be doing to respond to what customers want and
what their competition is offering? What’s the best way for a company to recognize why customers are loyal and build on those strengths?
-John
Hennessy- Moderator

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