A few months back, United had experienced some troubled times. And after having time to reflect, it brings a few certain thoughts to mind around how the world has changed for both consumers and big box retailers. As of late, big box retailers have become increasingly calculator-driven, so much so that they have almost forgotten about the customer service aspect of business. As a result, consumers are voting with their wallets, and big box retail corporations are crumbling all around us: Sears, RadioShack, and J.C. Penney are just a few that have announced closing stores, bankruptcy, or both. In the case of United, one article points out their loss of more than a billion dollars in evaluation happening practically overnight.
These corporations need to realize that we are in a time where it is not business as usual, and they’re getting their butts kicked seven ways to Sunday. Power has flipped from these big box retailers to the consumer, and this has changed the entire dynamic of business forever.
Here are just a few examples of the power shift:
- Choice: There was a time when there wasn’t much of a choice for consumers looking to make purchases. Not long ago, the Sears Catalog was the premier way many would shop for items, and over time these shopping behaviors evolved to malls. In today’s market, you now have boutique stores popping up everywhere, including the internet with Amazon, eBay, and virtually countless others changing the retail landscape forever. The ever-increasing large amount of competition being injected into the marketplace has been a predominant force for stealing market share from these large retailers. This means that if they did nothing at all and continued business as usual, customers are going to leave and market share will fall.
- Instant Gratification: With the increase of choice, also has grown the need for instant gratification. No longer are people willing to wait for weeks to receive items they’ve purchased. There was a point in time when malls kept locations fully stocked with inventory serving to this need of instant gratification; however, in today’s calculator-driven economy, big retailers have cut down on the amount of inventory on hand. With Amazon pushing Prime’s two-day delivery and Walmart following, customers now know that online will have a wider choice and delivery to their doors in days. Also, the smaller boutiques have caught on to this and have created equally strong online presences as they have in a physical retail setting. This allows them to keep a smaller inventory on hand and quickly pivot a customer to make an online purchase without losing out on the business.
- Customer Service: Not only do customers want instant gratification, they also want strong customer service, and they are not afraid to let you know when you’ve failed them. Social media has leveled the playing field for the everyday consumer. Beyond United’s PR nightmare, you regularly hear something in the media showcasing sometimes nightmarish consumer experiences. As an organization, customer service needs to be at the highest level of priority, from the senior executive staff down to the shelf stockers. In today’s calculator-driven economy in big retail’s quest to cut expenses, they have forgotten all about customer service. Reduction in employee head counts and wages have left stores in absolute disarray with long lines and employees that seem less than enthused to help customers. Sears has been a prime culprit of these types of cost-cutting measures; Business Insider recently covered their demise in an article published in July. As a result, customers are opting to shop at more personalized boutique stores and online where customers are treated as if they are the only customer in the room.
In summary, unless big box retail can focus on the customer and find ways to innovate rather than ways to cut costs, they are going to continue this downward spiral. However, their downward spiral presents opportunities for small businesses to capitalize on where these big box retail companies are failing. Smaller boutique stores and online companies are winning the battle for customers because they are increasingly customer-centric in their approach, along with finding ways to innovate around the customer experience.