Retailers may have outsmarted themselves

If you attended PMMI's Operations Conference a few weeks ago in Tampa, you heard Dan Mack of Mack Elevation Forum describe Winning in the New Normal. The new normal includes retailers being more strategic and deliberate about what goes on their shelves. That sounds like a worthy cause, but given recent experience in my family, I think that big retail may have outsmarted itself.

Soon after hearing Mr. Mack's report on how big retailers across the country are reducing the number of items in their stores, my wife vented to me about her latest shopping experience. I am sure that the retailers' strategy and her frustration are related.

You may be familiar with the facial tissue that comes packaged in box about 5 by 6 by 1 inches: the box that has been designed into the console of your SUV, your car litter box, or somewhere in your motor home. We carry a box in each of our three vehicles and put them in small places in the house, such as in a desk drawer.

The big retailer near us used to stock this package size of facial tissue in multiple parts of the store: in the paper products isle, in the automotive department and at several of the checkouts. A good deal of shelf space was devoted to this one package size of the product, given all of those facings.

When my wife last went to purchase some of this facial tissue, she couldn't locate the product. Clerks ran her all over the store to where it used to be displayed, but in the final analysis, she learned that our big-box store no longer carried the product. Probably some computer program calculated the sales per square foot of shelf space and eliminated the product from the store.

My wife hadn't yet heard the report that retailers are reducing item count in their stores in order to focus on more strategic items, so she ventured off to several more of the national drug and retail chains in town. None of them carried the product. They must all use the same software! Undeterred, and needing this uniquely sized package for the armrest of her Mountaineer, she came home and called the manufacturer.

The manufacturer's customer service representative checked her computer and told my wife of a store in our area that stocked the needed item. Alas, a gallon of gas later, there was none there either. That store was probably sold out picking up the sales that the other retailers gave up. Another call to the manufacturer followed, but this time with a different request; "can you send me some?" "No", replied the manufacturer, "but here is a number where you can order a case to be delivered to your door".

Now we have a case of facial tissue in that specially sized box. This is probably a three year supply. But our vehicles will be stocked with facial tissue when needed.

To me, this whole scenario makes very little sense. If a chain wants to get more strategic, why not go from carrying the product in half a dozen places in the store to just one? Why eliminate it from the store? In the process, big retail upset a customer and lost three year's worth of sales of that product, not to mention a few visits to the store which may have resulted in impulse purchases. The customer was inconvenienced, paid more for the product (although got 3 years of price protection) and developed one more positive experience with mail order shopping. It seems to me that nobody won.

If the new normal means putting strategic ideas ahead of serving customer needs, then that is bad strategy which will hurt consumers, retailers and packagers. Retailers may outsmart themselves, but they won't outsmart the consumer.

TrackBack

Comments Sounds like the retailers are thinking cost only again and not about customers. With thinking like this they will drive more and more customers online to get what stores don't have the customer intelligence to carry. Data is fine but it must be smart data tempered with some common sense about what customers really want, not necessarily what they are forced to buy because stores don't carry the right items. Home Depot is a good recent example of this - they never carry what I want and because of this I have to travel 20 miles out of my way to get it at Lowe's. If you want a common 2x4 (although probably warped) or white paint you can find it at Home Depot otherwise good luck on finding anything else. Posted by: Glenn Whiteside on April 30, 2009 Like Glenn, I find the big home stores to be a huge problem. They stock the high turnover items, but you usually can't complete a job just with the high turnover items. For example, one of our local stores stocked 2 conductor armoured cable but not 3 conductor - not very helpful if hooking up lights. I now drive 30 miles one way, past a couple of these big stores, to shop at a building supply and hardware store run by and for farmers. I know that they will have everything that I need and I don't waste time going from place to place to find it. Posted by: Keith Campbell on April 30, 2009 This is an easy one: The store you buy from isn't your stores buying power. You don't get to tell the store you want them to stock something. That goes through corporate and corporate is a million miles away from your wants or needs. remember when the store owner or manager asked customers about their needs or wants? Now send a little postcard to corporate or dial on the touch tone, one of those numbers might get you past a gatekeeper or a beep: Joes not here right now so leave a message. Vendors have it even tougher they fight like the dickens to get product placed in a store and then when the store back shelves it and it doesn't sell the vendor gets to collect it all back or pay a huge fine. And keep in mind the buy and placement came from Corporate so the vendor gets to retreive goods from all over the map. If an item that you really like gets caught up in this sort of deal the vendor just won't go there with that product again. It would be great if local stores could place orders for goods their customers want stocked, somehow it just doesn't work that way, computers and bar codes run the show and that has to be in place before it goes on the shelf. Goods over $20 or so get an RFID tag that beeps you as you leave the store. Makes things exciting I suppose.It lets you know real quick who the undercovers in the store are. Gotta give the stores some credit though, every time we go through the aisle past the cash regester. Posted by: John Edgerton on May 1, 2009 Once I was reading about how qualitative research needs to go in tandem with quantitative research. It makes so much sense in this context. When retailers carry thousands of SKUs, it is surprising that they are apparently not investing time and energy in applying the local trading knowledge of the store personnel. In other words, what I am referring to is "intuition". Posted by: Vinodini Chitrakaran on August 4, 2009 Post a comment (If you haven't left a comment here before, you may need to be approved by the site owner before your comment will appear. Until then, it won't appear on the entry. Thanks for waiting.) Name: Email Address: URL: Remember personal info? Comments: (you may use HTML tags for style) Type the word 'packaging' (required):