I recently posted about a disappointing experience I encountered with Best Buy's return/exchange policy. As it turns out, Best Buy's policy is substantially less flexible than what the manufacturer would have been able to offer had the product been purchased directly from the manufacturer.
I've spoken with enough Best Buy employees at this point that I feel as though I can correctly convey Best Buy's company policy. "If you don't think purchasing from Best Buy is as good as purchasing directly from the manufacturer, please purchase directly from the manufacturer in the future." I was told substantially similar versions of that statement by three Best Buy employees including the local store manager where my product was purchased, a customer service agent, and a customer service manager. They were more concerned with "being fair to all Best Buy customers" than making sure Best Buy would actually retain customers with which to adjudicate their policy of "fairness".
I'm still hoping that what I've been told so far is simply the result of well meaning Best Buy employees who don't have the authority to consider and act upon the implications of the policies they are enforcing. At the end of the day; when a retailer competes for market share they have to ensure that they treat customers better than the manufacturers' whose products they sell. There must be some added value for purchasing from a re-seller or customers will eventually go elsewhere - probably direct to the manufacturer or another re-seller that does "get it".
Retailers such as Walmart, Costco, Amazon, Apple, Zappos, and now JC Penny clearly understand this principle.
I'm looking forward to posting the outcome of this experience with Best Buy.
I came across an article published by Forbes which describes the challenges Best Buy is creating for itself
regarding customer loyalty, customer service and satisfaction.
Why Best Buy is Going out of Business...Gradually
Author: Larry Downes - Forbes Contributor
Published: January 12, 2012
Electronics retailer Best Buy is headed for the exits. I can’t say when exactly, but my guess is that it’s only a matter of time, maybe a few more years.
Consider a few key metrics. Despite the disappearance of competitors including Circuit City, the company is losing market share. Its last earnings announcement disappointed investors. In 2011, the company’s stock has lost 40% of its value. Forward P/E is a mere 6.23 (industry average is 10.20). Its market cap down to less than $9 billion. Its average analyst rating, according to The Street.com, is a B-.
Those are just some of the numbers, and they don’t look good. They bear out a prediction in March from the Wall Street Journal’s Heard on the Street column, which forecast “the worst is yet to come” for Best Buy investors. With the flop of 3D televisions and the expansion of Apple’s own retail locations, there was no killer product on the horizon that would lift it from the doldrums. Though the company accounts for almost a third of all U.S. consumer electronics purchases, analysts noted, the company remains a ripe target for more nimble competitors.
But the numbers only scratch the surface. To discover the real reasons behind the company’s decline, just take this simple test. Walk into one of the company’s retail locations or shop online. And try, really try, not to lose your temper.
I admit. I can’t do it. A few days ago, I visited a Best Buy store in Pinole, CA with a friend. He’s a devoted consumer electronics and media shopper, and wanted to buy the 3D blu ray of “How to Train Your Dragon,” which Best Buy sells exclusively. According to the company’s website, it’s backordered but available for pickup at the store we visited. The item wasn’t there, however, and the sales staff had no information.
But my friend decided to buy some other blu-ray discs. Or at least he tried to, until we were “assisted” by a young, poorly groomed sales clerk from the TV department, who wandered over to interrogate us. What kind of TV do you have? Do you have a cable service, or a satellite service? Do you have a triple play service plan?
He was clearly—and clumsily–trying to sell some alternative. (My guess is CinemaNow, Best Buy’s private label on-demand content service.) My friend politely but firmly told him he was not interested in switching his service from Comcast. I tried to change the subject by asking if there was a separate bin for 3D blu rays; he didn’t know.
The used car style questions continued. “I have just one last question for you,” he finally said to my friend. “How much do you pay Comcast every month?”
My friend is too polite. “How is that any of your business?” I asked him. “All right then,” he said, the fake smile unaffected, “You folks have a nice day.” He slinked back to his pit.
As a sometime business school professor, I could just imagine the conversation with the TV department manager the day before. “Corporate says we have to work on what’s called up-selling and cross-selling,” the clerk was informed in lieu of actual training on either the products or effective sales. “Whenever you aren’t with a customer, you need to be roaming the floor pushing our deal with CinemaNow. At the end of the day, I want to know how many people you’ve approached.”
But this is hardly customer service. It’s actually getting in the way of a customer who’s trying to self-service because there’s no one around who can answer a basic question about the store’s confusing layout. It’s anti-service.
We left the store, my friend having made his purchase but both of us fuming. I was reminded of a line from Ernest Hemingway’s “The Sun Also Rises.” One character asks another how he went bankrupt. “Two ways. Gradually, then suddenly.” Best Buy, I thought, is doing the same, just as many big box retailers have done in the last decade.
First comes the strategic bankruptcy, well in progress at Best Buy, where management’s sole focus is improving some arbitrary metric from last quarter, even when doing so actually interferes with customers trying to buy something else. The financial collapse comes later. But if history is any guide, the second part, once it starts, will be quick.
As with many large retailers unable to cope with new channels and new consumer expectations, the company will continue to sputter on fumes, slowing down bit by bit until one day it just stops moving. Think of Elek-Tek, Virgin Megastores, or KB Toys. (See a non-exhaustive, nostalgia-inducing list of recently-failed retailers over at Wikipedia.)
The new conventional wisdom says that big box retailers like Best Buy are going the way of the dinosaur. Online giants, notably Amazon, are the future. Online retailers are more efficient, because they lack physical locations, and so can offer better prices. Shopping online is also more convenient. On the web, consumers can shop anywhere they are, day or night. (Amazon has a market cap of $80 billion and a P/E of 91.)
Best Buy and other traditional retailers complain that Amazon can undercut them in prices because the site doesn’t charge sales tax, and that Amazon customers use Best Buy as their showroom, taking advantage of the extensive, well-stocked locations and knowledgeable staff to research products they actually buy from someone else online.
Online competitors are certainly part of Best Buy’s problem, but not for the reasons it thinks. What’s really going on is more basic. Best Buy just doesn’t understand its customers’ point of view.
To compete successfully against new online retailers, traditional retailers would also need to find ways to transform the expensive liabilities of physical locations with limited hours and high labor and inventory costs into assets that complemented rather than competed with the online experience.
Many retailers have struggled to make the transition; some have fallen on their swords along the way. So far, Best Buy fails on every measure. The company has its own website, of course, and offers customers the opportunity to order online and pickup and return in-store. (At the Pinole store, there is a separate line for pickups at the customer service desk, though it is staffed by the same people who handle returns and other service problems. Lines are longer and slower than for in-store checkout.)
But the website doesn’t seem to be programmed for even basic inventory management. An article in theMinneapolis Star Tribune, the company’s hometown newspaper, reported a few days before Christmas that the company had only just informed some customers that online orders, some placed the day after Thanksgiving, couldn’t be filled and were being cancelled. The out of stock items included the most popular items, including TVs and iPads, “as well as other tablets, cameras, laptops, PS3 games and the Nintendo Wii.”
The company issued a statement that read: “Due to overwhelming demand of hot product offerings on BestBuy.com during the November and December time period, we have encountered a situation that has affected redemption of some of our customers’ online orders.”
Let’s parse that sentence for a moment. The company “encountered a situation”—that is, it was a passive victim of an external problem it couldn’t control, in this case, customers daring to order products it acknowledges were “hot” buys. This happened, inconveniently for Best Buy, during “the November and December period,” that is, the only months that matter to a retailer. For obvious reasons, the statement ties itself in knots trying to avoid mentioning that the “situation” occurred during the holidays.
The situation that Best Buy “encountered” has “affected redemption” of some orders. Best Buy doesn’t fill online orders, it seems. Rather, customers “redeem” them. So it’s the customers, not Best Buy, who have the problem. And those customers haven’t been left hanging; they’ve only been “affected” in efforts to “redeem” their orders. It’s not as if the company did anything wrong, or, indeed, anything at all.
It’s all so passive. It’s also a transparent and truly feeble pack of lies. Here’s what the honest and appropriate release would have said: “Due to poor inventory management and sales forecasting of the most popular products during our key sales season, we can’t fill orders we promised to fill weeks ago in time for Christmas.”
There’s a little more to the Best Buy’s press release: “We are very sorry for the inconvenience this has caused, and we have notified the affected customers.”
Again, note the use of the passive voice—”this” refers to the “situation” that Best Buy “encountered.” The “situation,” not Best Buy’s poor operations, “has caused” inconvenience to customers. It’s not something Best Buy did wrong. It’s like they’re reporting the weather; something utterly out of their control about which the company is a mere observer. They’ve “notified the affected customers” despite, it seems, no sense of obligation to do so, let alone to find a solution to a problem entirely of the company’s own creation. How sorry are they, do you think?
According to the article, the company refused to answer any questions beyond the release.
READ THE ENTIRE ARTICLE AT FORBES.COM
