Retail Anthropology - The Science of Sales

Link: http://www.forbes.com/sites/larrydownes/2012/01/02/why-best-buy-is-going-out-of-business-gradually/

Came across this interesting article in Forbes yesterday and while you can discount the personal anecdotes I think most of the fundamental premise is sound: retail is facing a lot of challenges right now and more than ever brick and mortar stores HAVE to focus on the customer.  You're rarely going to win on price anymore - Amazon.com and other Internet retailers are killing people on price because they have lower overhead. If you don't win on customer service it's going to be very very hard to compete.

So what advantages do brick and mortar retailers like Best Buy have? Well, first and foremost, immediacy. If I have a client who needs something TODAY then Amazon doesn't help me - there's no way FedEx is getting here with the product in the next two hours. I can walk into a Best Buy and, if they have it in stock (which can be a big IF) I can walk out the door with my product right away.

Second - human contact. This one is getting tougher and tougher. Amazon comes a close second with online customer reviews but it's hard to beat a friendly, knowledgable, person who can answer your questions. Unfortunately few retailers can meet this high bar - consumer electronics in particular is a rapidly changing field with a WIDE array of products. It's almost impossible for anybody (especially somebody making $10/hour) to effectively keep up with every product on the floor. Still, a strong emphasis on customer service and a positive attitude can go a long way even in the absence of immediate knowledge. You don't have to know everything if you can find out anything.

Third - The touch factor. Somethings you just want to touch and see before you buy. It's nice to be able to try that iPad or feel the heft of that digital camera before you buy it. Unfortunately here you have to have some way to convert the customer's desire to buy into a desire to have it NOW. Otherwise what happens is the customer plays with it in your store, then goes to Amazon.com on their SmartPhone and orders it from them while walking to your exits. Luckily that kind of conversion is not too hard to do, if you try. When people buy toys people want to play. There's a curiously empty feeling associated with seeing and touching a device you want to buy but walking to the parking lot with empty hands. They don't want to wait 5 days for that new TV or iPad - they want to take it home and unbox it. But you have to be competitive on price and you have to have inventory in stock.

Ultimately retailers like Best Buy are going to have to refocus on the customer and try to play to their own strengths. Downes' point about Best Buy's customer service and their distribution and fulfillment systems is exactly right. The retail world has changed a lot in the last few years and Amazon (and other online retailers) are going to drive a stake through the brick and mortar retailers who don't upgrade their game.