It seems like every day you read in the media about another stalwart in the retail industry closing its doors or of another dying shopping mall. Most recently, Toys “R” Us announced the liquidation of the chain’s assets. The chain is one of 24 outlined in this Fox Business article. If you believe the narratives, you would think that retail is dead; but that’s simply not true. Many retail stores are growing and earning more than ever. In a recent Forbes article, a longtime shopping center operator reported that our malls and retail outlets have an occupancy rate of 93%. How do these retailers persevere? They focus on customer engagement.
Case Study: Best Buy
What People Said: Negative
This 2016 article published on the website, the Motley Fool, predicted: “the digital revolution led by Amazon.com almost certainly guarantees the end of Best Buy as the big-box retailer it currently operates as.” And this 2014 article by the USA Today, had the headline, “When Best Buy fails, this is how it will happen.” After years of speculation, not only does Best Buy still stand, but it also is working in cooperation with Amazon in TV distribution.
What People Are Saying: Positive
The narrative has changed. In 2017, the New York Times took a look at Best Buy’s resilience, running an article titled, “Best Buy’s Secret for Thriving in the Amazon Age.” The piece covered the chain’s rebound and the fact that it exceeded Wall Street’s expectations in six of the last seven quarters. In May of 2018, Reuters ran a story about Best Buy’s turnaround and positioning to take on Amazon. In the piece, CEO Hubert Joly summed up the marketplace like this, “We have not only survived but thrived and I don’t believe this is a winner-takes-all market.”
While many predicted a Circuit City type of extinction, Best Buy embraced the idea of showrooming, and the corporation took steps to compete head-on with online retailers. Its efforts paidoff with the company boosting online sales by 17% and same-store sales increasing 3.8%. This represents a historic turnaround.
The end result? As reported by Retail Dive, Best Buy will open its first new store in seven years, choosing Farmington, UT – a growing section of Salt Lake City, as the location.
Taking a New Approach
How did the company rise from the ashes? First, its executive team identified the problem: high-prices and people looking at a product before buying online. To combat this event, Joly created a new initiative: customer service and competition. For him, the two went hand-in-hand, but he had to learn the importance of good customer engagement.
In an effort called Renew Blue, Joly cut prices and started a price-matching program online and in store. He also tried to streamline the supply chain and lowercosts by reducing headcount, which backfired on the company as more seasoned and knowledgeable employees were letgo. The bad customer experience led to lower sales.
A Focus on Engagement
To help combat the trend, the company has started to increase employee training so that they have the knowledge and skills needed to be true advisors to the company. The other strategy to engage customers was to play on the need for immediate gratification. Traditionally, ordering online meant waiting a week or more unless the customer paid for expedited shipping, but Best Buy cut this step out with the ship from store idea.
This strategy of good customer service is to advise the customer on the purchase, allow the customer to touch, and get a feel of the product, and lower prices have positioned the company to compete with the online sector.
Customer Engagement Wins
What Best Buy does better than other discount stores is provide quality customer service. While a customer can go to a warehouse store or large chain and get electronics or appliances, Best Buy offers a sales team that’s focused on meeting the customer’s needs and helping the customer understand the product. Unlike the big players, Best Buy employees are trained to become experts in one area; they don’t focus on traditional stock and clerk type activities that the discount chain employees focus on.
The company is also growing its social media engagement with a focus on helping customers find the right product for their needs. The pages encourage discussion and offer feedback to customers.
Good customer engagement meets customers where they are, giving them the tools to make interaction easy and efficient.
Another component that sets successful retailers apart from struggling ones is the wealth of information provided beyond the clerks. Digital displays and interactive computer and video guides can also provide on-the-spot specifications and experiences before or after the engagement with a clerk.
Worldlink Integration Group enables technology to work for you by making the best IT, digital display, and Point of Sale solutions for your business and based on your best interests. Contact us to discuss solutions for your business.