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Jeff Kagan: Retail Becoming Customer Unfriendly

Retail is using new technology and practices which are customer unfriendly. This helps the investor short-term, but hurts the company, customers and the investor long-term.
Jeff Kagan is a telecom, technology and wireless analyst and consultant. Follow him at and on Twitter @jeffkagan.
Jeff Kagan is a telecom, technology and wireless analyst and consultant. Follow him at and on Twitter @jeffkagan.

I have been noticing how in recent years, retail is becoming increasingly unfriendly to the customer. This is a mistake. New technologies and new ideas may be good for the bottom line in the short-term. They may solve problems like shoplifting, and that may make investors happy today. However, in the long-term, these customer unfriendly trends will take their toll as customers will shop where they feel appreciated, respected and wanted.

Customers shop at stores they love. Love is an emotion. So, we must think of winning the customer with emotion. This is difficult for most businesspeople to understand.

This was always the secret to Apple’s success with their iPhone, iPad, MacBook and more. They took great care of the customer and the customer loved them for it. That was one of the key differences between Apple [AAPL] and Microsoft [MSFT].

Just look at the list of companies that once led their sectors, but that have now collapsed as new competitors moved in. This happens time and time again. The thing companies should focus on first is if their customer is happy.

How to keep your customers happy

That should be the focus of every new idea. If the customer is happy, everything falls into place. So, each new idea should be measured by asking the question, will this make the customer happy?

So, how do you keep your customers happy?

That’s the rule of the road Herb Kelleher, founder and CEO of Southwest Airlines [LUV], always lived by. First, focus on your workers. If they are happy, then the customer will be taken care of. If that happens, the investor will be satisfied. Everyone wins.

However, for this to work, you must do all three and you focus on this order.

If that’s the case, why then do so many companies only focus on the investor? Focusing on the investor first is not a recipe for success in the longer term in a marketplace full of competitors.

Costco, Sam’s Club and Walmart

Let me share with you several examples to consider.

Costco [COST] is a success in their category. While customers like shopping there, they don’t like the way they are treated like cattle. First, you have to pay to shop there. Even then, the prices are not always better than other retail stores.

You are checked for your card before they let you in. Plus, everything is packaged in giant packages when many people don’t have that much room for storage at home.

Then, when you check out, the only credit card you can use is Visa. Otherwise it’s debit or cash. That means customers must remember to bring in their Visa card if they want to make a purchase on credit. I hear complaints from people who don’t have a Visa card or who leave it in the car or at home.

They do not offer bags. That means everything you buy flies around your trunk on the way home. Why don’t they at the very least sell bags for customers who want them? That is customer focused. Something Costco does not seem to be. They say it’s their way or the highway.

After checking out the misery is not yet over. When walking out of the store, customers are forced to wait through a long line to have their purchases compared to their receipt.

This makes every customer feel like they are considered to be thieves by the store. Not the way a retailer should make the customer feel.

Always think of things from the customer perspective

There is so much wrong with this Costco business model from the customer perspective. My father and mother were two retail store owners and they always taught me the customer always comes first. That’s the only way to keep them happy and keep them coming back.

If that’s the case, why does Costco keep stepping on their customers toes? I believe as the marketplace continues to grow and change, and as new competitors come into play, Costco and other warehouse stores will have to focus more on the customer in order to continue to be a winner.

Sam’s Club, the Walmart [WMT] equivalent to Costco, was always a friendlier place to shop. However, like with Costco, suddenly, Sam’s Club won’t let you into the store to shop without your member card.

This goes against their customer friendlier approach of yesterday. Today, they are starting to treat their customers like cattle like Costco, and customers don’t like it.

Walmart was always a huge, successful retailer. As we move ahead, some new practices are making them increasingly customer unfriendly.

Not only are there not enough workers on the floor to answer questions, but the workers who are there simply don’t care about the customer. They don’t see it as part of their job to take care of the customer. That’s a big strategic mistake.

Don’t treat customers like criminals to fix shoplifting problem

Now, suddenly at many Walmart stores, like at Costco and Sam’s Club, they won’t let you out of the store without comparing your receipt to your basket. Once again, this tackles the shoplifting problem by making every customer feel like Walmart considers them a thief. Not smart.

I understand the retail shoplifting dilemma of combatting shoplifting. However, forcing all the good customers into the same corral as the bad customers is a big mistake.

Customers simply do not like this and that keeps them from being connected to the brand. That means when a better competitor moves in, these companies will lose market share.

Another mistake Walmart is making is putting technology in front of their customers. They now have AI robots rolling up and down the aisles, scaring customers and pushing them aside as they take inventory, scan every customer and whatever else they are doing.

I watched how this robot blocked a line of customers from moving and shopping until several minutes later it decided to move once again. If this weren’t so serious a mistake, it would be funny. This is unacceptable.

One of the biggest mistakes retailers make

Using technology to improve your business is always a good idea. However, treating customers like dirt or criminals and putting their needs behind your technology is wrong. This is one of the biggest mistakes AI and technology can do to hurt a retail store.

It’s a matter of building your business by focusing the bottom line on the customer.

Comcast [CMCSA], Charter Communications [CHTR], Altice [ATUS], Cox and other cable television companies used to not pay any attention to the customer. That’s why you had to wait too long and sit around waiting for a repair truck to finally roll up.

This didn’t hurt the cable TV business years ago, but it is today. The reason they did this was, they had no competition in their market area. That meant the customer could not leave them.

Comcast Xfinity, Charter Spectrum, Altice, Cox

Years ago, these companies never cared about taking care of the customer because they operated in regional monopolies and paid no price for poor service. That’s one reason customers have a long-standing dislike of the traditional cable TV industry. This is why their customers fundamentally disliked their cable TV provider.

Over the last decade they are finally finding themselves in a competitive marketplace. The Internet and wireless services are continuing to empower competitors and they are losing market share. That’s why they have changed their tune and are more focused on the customer than ever before.

And this is the reason companies like Comcast and Charter changed their name to Xfinity and Spectrum. They never cared about the customer, so when new technology empowered new competitors, they couldn’t hang onto their market share.

Every company should be focused on customer satisfaction

These are just some of many examples of where companies miss the mark with the customer. Customer care, the customer experience and customer satisfaction. Today, every company must be focused on the customer.

The bottom line for any business is always focus on the customer. If they are happy, your business will remain strong and growing.

Remember Herb Kelleher’s advice. Always focus on your people first. When they are happy, they will take great care of the customer and both will be happy. When this happens, the company grows, and the investor is rewarded.

CEOs have a tough job keeping workers, customers and investors happy and satisfied. Investors should realize this as well. True, the investor is the ultimate bottom line, But, focusing on the investor first is a mistake many companies make.

This is also the mistake many activist investors make when trying to get the company to focus on them first.

That’s why companies should focus on the customer first. To do that, take great care of your workers. Companies who get this right will have happy investors.

Jeff Kagan is an columnist. Kagan is a Wireless Analyst, Telecom Analyst, IoT Analyst, Industry Analyst, Influencer, speaker and consultant. He follows wireless, wire line, telecom, Internet, pay TV, cable TV, IPTV, Cloud, Mobile Pay and communications technology. Email him at [email protected]. His web site is Follow him on Twitter @jeffkagan.


Equities Contributor: Jeff Kagan

Source: Equities News

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