Can Multiple Retailing and Good Customer Experience Ever Mix?

tescoExpress1Last week a former colleague, Mark Doyle, blogged about the soulless and depressing experience of shopping at his local Tesco Express . He felt sorry for the staff and commented that they “often seemed stressed” and that the stores seemed “designed to minimise customer interaction at all costs.”

Tesco have had a bad run of it lately with CEO Phil Clarke presiding over a horror show since the prescient and fortuitous retirement of Terry Leahy – David Moyes and Alex Ferguson anyone? In yesterday’s Irish Times Conor Pope wrote that in the Autumn of 2012 Tesco “commanded 28.6% of the market, seven points clear of Dunnes Stores in second place, and its aggressive pricing policies combined with the proliferation of its stores across the State had seen its share increase for more than two years. It has been downhill ever since.” It is now in danger of losing its number one spot to SuperValu with a less than 1% lead in danger of being swallowed up before the summer is out.

At the turn of the Millennium I spent 18 months working in both their UK and Irish operations. Having moved from a Fund Administrator I was surprised at how slick and process-focused Tesco’s UK operations were. Their systems, supply chain and people policies were highly evolved and – along with beating Sainsbury’s and ASDA in the grab for key out of town sites – a key component in their becoming number one retailer in the UK market place. Their Irish operations were less evolved but proved a healthy foundation to Tesco dominating the Irish grocery market over the last decade.

Apart from the superior systems, one thing that did strike me was that the UK staff appeared to be happier than their Irish counterparts – in fact I remember making the quip that there was more managerial talent on the shop floor in Tesco Gatwick than there was in a typical banking operation. I retained a keen interest in the retail market once I moved on and noted that I always returned to the stores where I enjoyed the overall experience. Unfortunately for Tesco, this was more often than not my local Superquinn and surprisingly at times, Dunnes. But even in the UK there was something cold and clinical about the overall Tesco experience, so much so that I more often than not shopped in my local Sainsbury’s in Hayward’s Heath, West Sussex.

Clive Woodward, the World Cup-winning England rugby coach, once mentioned that the only business book that he ever appreciated was Brisbane dentist Paddi Lund’s “Building the Happiness-Centred Business” (1994). The story goes that Lund hated running his dental practice so much that it drove him to the brink of madness, and he decided to take a

Paddi Lund
Paddi Lund

detour on his way to work one morning via the Story Bridge – use your imagination. Lund finally decided to go to work that day and sacked the clients he disliked and asked the ones he liked to refer him to their friends. He refashioned his clinic around the idea of making sure that everyone was happy and treated each other with courtesy and respect. His book made such an impression on Woodward that he decided to apply a number of its teachings to the England rugby squad. The rest is history.

According to Lund “most people in business think that their customers buy their product because it is better or cheaper. I believe that whether or not a customer buys from a business is most often determined by the people in that business…With regard to price, I find that if I enjoy the company of the people who are selling an item to me I am prepared to pay more than I would elsewhere.”

Happy and enthusiastic people add to the experience. But given the gruelling, labour intensive and disempowered nature of multiple retailing, a happy and enthusiastic person entering retailing tends not to remain one.

Given that there’s an abundance of everything, how do we, as consumers, differentiate? What happens when every coat and pair of shoes looks the same, a hotel in Sydney is similar to one in Shanghai, and the home baking aisle in Tesco is no different to the one in ASDA? What happens is that you want something else. But in a world of abundance what is that something else? Today utility has become widespread, inexpensive and relatively easy to achieve, which has increased the value of significance.

In A Whole New Mind (2005) Daniel Pink puts his finger on the solution when he says that when our basic needs are met – as they have been in the affluent society of the West – we tend to look for meaningful emotional experiences.

“It’s no longer enough to create a product that’s reasonably priced and adequately functional. It must be beautiful, unique and meaningful.”

Ok, so it may be pushing it to say that multiple retailing can be “beautiful, unique and meaningful” but there’s no doubt that there’s huge scope for reinventing the experience. Tesco’s re-entry into the Irish market in 1997 saw them move to a centralised distribution model, with their competitors following suit – Dunnes, incredibly given the known benefits, were laggards in this area and took over a decade to take the plunge. Central distribution leads to greater control over stock, suppliers, reduces waste and results in more efficiency in replenishment among other things. It does though tend to neuter the trading instinct of managers and may have something to do with some of the flair and theatre vanishing from retailing. Store managers have less and less autonomy when it comes to what they order as many key decision are ordained from on high in head office.

Good companies that provide great service have recognised that there’s been a shift from passive consumption to active participation. These companies – unlike multiple retailers – know they can no longer treat people as passive consumers. So where does this culture of spontaneity come from? Let’s look at two companies renowned for excellent customer service, Zappos, and Four Seasons.

Zappos is a shoe company that places its confidence in Autonomy over Technique. Zappos doesn’t monitor its customer service employees’ call times or require them to use scripts. The reps handle calls the way they want to. Their job is to serve the customer, and how they do that is up to them. The turnover at Zappos is minimal and although it’s still a young company Zappos consistently ranks as one of the best companies for customer service in the US ahead of better known names like Cadillac, BMW, and Apple, and roughly equal to brands like Jaguar and Ritz Carlton. What Zappos is doing is part of a small but growing move to restore some measure of individual freedom in jobs usually known for the lack of it. This leads to a culture of spontaneity.

Four Seasons Hotels are famous for their quality of service as much as for the luxury of their properties. They are also recognised within the industry for having a staff-training system in which staff members learn how to anticipate the needs of their customers and build on the ideas of their colleagues. Creating an experience culture requires going beyond the generic to design experiences perceived as uniquely tailored to each customer. Unlike a manufactured product or a standardised service, an experience comes to life when it feels personalised and customised. The designers in head office set the stage for the experience, but they cannot anticipate every opportunity. This is why the training programme at Four Seasons includes improvisation rather than drilling the staff with prepared scripts. A real experience culture is a culture of spontaneity.

The big lesson here is that whether you (the CEO or Marketing Director) like it or not the “best experiences are not scripted at corporate HQ but delivered on the spot by front line service providers.”

I don’t have an answer as to the type of disruptive innovation that the Steve Jobs of multiple retailing needs to recharge Tesco’s model, but he – whoever he is – could begin with having a good look at vastly improving the front line service and experience delivered to the customer by a re-empowered, healthy, and happy front-line staff.

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