Mass Associates Fail Consumer Electronics Service Test

Discussion
Aug 20, 2007

By George Anderson

If you’re looking for knowledgeable help when buying your next television,
don’t go to a mass merchant, warehouse club or department store. If you do,
according to J.D. Power, you’re likely to be disappointed.

The research firm, which used mystery shoppers in Atlanta and Denver, found
that when it came to offering excellent customer service, specialty stores
such as Best Buy were head and shoulders above mass market merchants.

Among the stores involved in the "mass" study were BJ’s, Costco,
Kmart, Sam’s Club, Sears, Target and Wal-Mart. Specialty merchants that were
visited included BrandsMart U.S.A., Best Buy, Circuit City, Fry’s, hhgregg,
Rex and Ultimate Electronics.

The study, which assessed performance on customer assistance, product knowledge
and sales skills, found striking differences in service depending on the store
format.,,

When it came to making contact with consumers in stores, the average wait
time in mass stores were five to seven minutes compared to between 90 seconds
and five minutes in specialty outlets. Best Buy and Circuit City had the slowest
response times in specialty segment but were still superior to those grouped
in the mass segment.

When it came to understanding product, J.D. Power ranked mass merchant associates’
knowledge of the consumer electronics they were selling as "barely acceptable."

In the sales skill department, mass merchant associates were less skilled
with numbers below 10 percent (Kmart and Target) and up to 40 percent (Sears)
offering to shake hands with customers seeking help. Roughly two out of three
associates in the specialty chains offered their hand to customers. Mass associates
were also less likely to ask customers’ names than their counterparts with
specialty retailers.

According to J.D. Power, the deficiencies in mass merchant customer service
is problematic at a time when these businesses are looking to move into more
upscale product lines.

Chris Denove, vice president with J.D. Power, told TWICE, mass merchant shoppers
are generally not as sophisticated about consumer electronics as specialty
store customers. "These are the customers most in need of a knowledgeable
salesperson," said Mr. Denove.

Discussion Question: How important is customer service for retailers in the
mass, club and department store channels to succeed in achieving the goal of
selling more upscale consumer electronics? If it is important, how do these
retailers get to that place?

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15 Comments on "Mass Associates Fail Consumer Electronics Service Test"


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Pradip V. Mehta, P.E.
Guest
Pradip V. Mehta, P.E.
14 years 8 months ago

Customer service for retailers in the mass, club and department store channels to succeed in achieving the goal of selling more upscale consumer electronics is very important. Consumers today have too many choices in terms of where to buy from. Therefore, those stores who have associates who can answer consumers’ questions and explain the difference between various features and prices will have a competitive advantage. Recently, we bought a 40″ Sony Bravia HD television for my daughter from Best Buy. I was impressed with the young man who worked with me and answered all my questions. If it wasn’t for that, I would have gone somewhere else because today, price is not a differentiator any more. Most any store will match the lower price of a competitor. “Knowledge is power” is certainly true when it comes to consumer electronics.

Liz Crawford
Guest
14 years 8 months ago

I totally agree with Anne’s solution. If the mass seller wants to preserve its margin, then the business model would probably dictate a call center antidote.

Failing that, compete on price.

Bernie Slome
Guest
Bernie Slome
14 years 8 months ago

Customer Service when demonstrated by a retailer is a very powerful tool to increasing revenue, profitability and enhancing the brand. Many retailers have the same or similar merchandise on their shelf at very similar pricing.

What sets them apart is the customer experience that they are offering which includes customer service.

In order to improve the customer service, the retailers needs to make it part of the mission statement (and mean it), senior management must champion the concept, store associates must be retrained and the results must be measured through mystery shopping. Additionally, a retailer should employ an IVR (Interactive Voice Recognition) program to measure C-SAT and how their customers perceive the service and experience.

Why play around with customer service when customer satisfaction accounts for 8% of the variation in customer growth & 6% of the variance in sales growth according to a study done by Prof. Babakus, of the University of Memphis?

Mary Baum
Guest
Mary Baum
14 years 8 months ago

What’s stunning about this is that it comes in the same year as Circuit City’s decision to eliminate its top level of compensation for its most knowledgeable salespeople.

I guess the bottom line is–what’s the effect of the level of salesperson knowledge on actual sales in the mass marketers versus the specialty stores?

I’ve always been told that mystery-shop scores track right along with revenue in a variety of industries across the retail spectrum, but clearly there are cases where the mass-merchant customer is a captive audience: If you want a technology product and you live in a rural area, your choices may be Wal-Mart and Wal-Mart.

At that point, it would probably take some sort of competitive pressure–a new center with a specialty store coming to town, or better service by UPS and FedEx, which would further open online channels–to get the mass merchants to hire and train more appropriate folks for the technology areas.

Doug Fleener
Guest
14 years 8 months ago

I don’t think there is anything surprising in this report, it confirms what most retailers and consumer already know.

What’s missing though is how these retailers did against the average consumer’s expectations. Most consumers would have considerably higher expectations of a Best Buy employee than of a Kmart or Target employee. Furthermore, I don’t believe the average consumer expects a handshake from the sales help at Kmart or Target either.

So yes, the mass merchant does fall shorter BUT does it fall short of the customer’s expectations? Same for the specialty store. While they clearly outperform the mass merchants, do they meet their customer’s expectation? That’s what really matters in the long run.

Charles P. Walsh
Guest
Charles P. Walsh
14 years 8 months ago

If having knowledgeable sales help in areas such as electronics were THE TICKET to ensuring market share, then we should never have seen mass merchants the likes of Target, Kmart and Wal-Mart gain so much market share from full service retailers.

The fact is that mass offsets their lack of knowledgeable service by offering low prices and good (not great) selection. Take a look at how market share has eroded or is under pressure at these “full service” retailers.

Customers understand the equation and make their choice accordingly.

Mark Lilien
Guest
14 years 8 months ago

Mass merchants are self-service stores. It’s unrealistic to expect self-service businesses to change their paradigm just for consumer electronics. Self-service stores rely on signage, labels, advertising, and web sites to educate their shoppers. Not just for electronics, but for every merchandise category. Their customers are price-driven, not service-driven. Finding minimal help in a self-service store isn’t front page news.

Nikki Baird
Guest
Nikki Baird
14 years 8 months ago
I think there is a trade-off. If you go to a specialty store, you expect knowledgeable staff and a high level of service–and you expect to pay for some of that in the price of the item. If you go to a mass merchant, you expect the lowest price, and no service. Department stores are a little bit different. I think consumers expect a higher level of service from them, but because they don’t do the same volume as a specialty store, it’s going to be harder for them to offer the “best” price. If I were a mass merchant, I would only carry the electronics that have been around long enough that there is a level of education out there about the products. A mass merchant shouldn’t be on the cutting edge of consumer electronics. If they stay with the things that are starting to reach the high point of adoption, then they don’t need to change their model of low price/low service. If they really really want to increase the level of service… Read more »
Anne Howe
Guest
14 years 8 months ago

I agree that the training component is needed but product selection plays a role as well. Consumer survey data shows that twice as many people cite poor product selection (vs. knowledgeable sales people) as a reason to switch from the mass channel in the electronics category.

I’ll bet some of the second and third tier brands found at mass retailers may not have the vendor in-service training available. But if they publish comparable features and benefits information more visibly in stores, the sales associate could at least be conversant in fast facts and point the shopper toward more detailed data to aid in the decision making process.

And why couldn’t a big mass retailer staff a 24/7 call center with experts, so any “on the floor associate” could make a call and get the shopper connected to higher level help and more information while they are shopping? Just a thought.

Doron Levy
Guest
Doron Levy
14 years 8 months ago

Customer service and product knowledge is critical in any retail format and if the the mass merchants, clubs and department stores want to start selling more high end tech, they are going to have to dedicate staff and associates to that particular area. These associates are going to have to be trained extensively in product knowledge by vendor in-servicing. With the amount of traffic these formats can generate, I can’t see how any manufacturer wouldn’t want to jump on board and help train associates. The key is product knowledge and customer service! Well trained and informed associates will definitely be able to drive the numbers up.

Phillip T. Straniero
Guest
Phillip T. Straniero
14 years 8 months ago

If I am the average electronics consumer, I will be the first to admit that I do not know anything about electronics and am often limited to making choices based on cosmetic features or price.

I continue to find my self going to a Best Buy or equivalent to gain an insight from the sales advisers in the store because they tend to know the products and can help me work my way through the many offerings with differing features.

If the large box folks want to play in this arena then they are going to need to acquire or train folks in this very specialized area of the store!

The current staffing won’t work unless the department is driven by price alone….

MARK DECKARD
Guest
MARK DECKARD
14 years 8 months ago

No epiphany here. Hope they didn’t spend too much on the study.

Technical knowledge, and a wider selection of the latest and greatest is about the ONLY reasons to go to a specialty retailer for consumer electronics.

As others have stated, mass merchants are about self service and price. As the level of service and complexity increases, so does the price. It doesn’t take a sophisticated customer to understand the concept.

Increasing percentages of customers go online for pre-purchase research to learn about and compare products offered, as well as price comparisons between retailers.

Online product information is a venue that mass merchandisers like Wal-Mart are beginning to use with more success since both customers and store personnel can use this tool.

Don Delzell
Guest
Don Delzell
14 years 8 months ago
I agree with the growing number of voices measuring the JD Powers results against the realities of mass market participation in consumer electronics. Should any of these results surprise any of us? I hope not. Effective mass market participation in consumer electronics is limited to mature or easily comprehended technologies. Mature technologies do not need a great deal of consumer comprehension. Very few of the average consumers understood nuances of CD player performance, and this lack of knowledge had no impact on purchase and adoption. The technology was sufficiently mature to have settled out and created a sense of acceptance. Mass merchants do best when focusing on mature technologies. Applying purchasing power, lower margin acceptance and overall price point deflation, mass merchants expand the potential number of adopters and dominate overall share. Mass customers are not interested in developing technology…it’s too risky. Given the level of discretionary spend relative to income, and the need to make good purchase decisions, the mass consumer tends toward risk aversion in technology. Yes, they want it. Yes, they can… Read more »
Ed Dennis
Guest
Ed Dennis
14 years 8 months ago
I think it’s impossible for the mass retailers to institute training programs for employees that will solve this problem. Many of the consumers shopping these departments are availing themselves of the tons of information available on the internet. For those who aren’t, I might suggest that kiosks be set up with “walk though” product instruction. The same might be offered on the retailer’s web site. Just because retailers cannot attract and pay a “geek squad” is no reason to ignore the consumer. If an honest, informative tool is developed that presents information in a straight forward way coupled with third party (CNET.com type reviews) I think the consumer will be and can be satisfied. I know I would prefer this to some over educated lingo lizard nerd explaining things so far over my head that I comprehend nothing. I have yet to meet one of these people who wasn’t convinced that more is better, but what is the point of buying a TV that has capabilities that you will only be able to receive on… Read more »
Stephan Kouzomis
Guest
Stephan Kouzomis
14 years 8 months ago

Customer service, linked to knowledgeable sales associates who care. Then, enters loyalty and meaningful gross profit margins.

Customer service is spelled – Nordstrom, Whole Foods, some Sam’s Clubs, Nieman Marcus, Coach, Marriott, Publix, some Macy’s, Bose, Volvo dealers and service departments, and more.

Interestingly, these business entities cover the spectrum of upscale to lower, middle income…. A big enough target audience for most corporations.

Or, is it? Our grocery industry, in general, still wants to sell to the mass market…whether to the lower income or to very upscale and wealthy! Hmmmmmmmmm Can’t do everything in today’s very segmented business world.

A MAD MARKETING thought from the perspective of the consumers and their marketing needs.

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