Welcome to the the Ivey HBA Retail Marketing Management blog. Retail marketing is an exciting, dynamic, important, and very visible aspect of the overall field of marketing. Throughout the year, students will be posting comments regarding contemporary retailing issues. Although this is intended to be used by Bus 4411 students, industry marketing professionals are also invited to join in if they like.

Thursday, March 26, 2009

Effects of a salmonella crisis on small retailers' customer relationships

In February 2009 layer chickens on three egg-producing farms in Western Finland were discovered to be carrying salmonella for the first time in almost 10 years. This incident launched both an extensive investigation into the reasons behind the discovery and huge media attention. If salmonella is found from any of the farms, their chicken will be disposed of and the eggs will be prevented from entering the market. This may cause problems to the smaller retailers as their only egg producer can’t deliver eggs for a while. Larger retailers are less affected as they have several producers. In this particular case the eggs never actually came to retailers and consumers, but let’s assume for a while that they did and consumers were exposed to real salmonella threat. Consumers would also be unable to buy eggs from smaller grocery stores because of lack of deliveries.

How are the small retailers and final consumers affected by this crisis? Do smaller retailers suffer more than large ones? Would consumers change a retailer because of such incident?

Smaller retailers’ RVP is often based on at least higher customer experience and price than the bigger retailers’. Even though the smaller retailers are the ones who are the first ones to be affected by the delivery issues and stock out of eggs due to the salmonella crisis, their customers might also be the ones with the highest loyalty to the store. Having the personal relationships with the small customers the retailers are more capable to explain the customers where the problems originate from and how they are being dealt with. The retailer could show his/her commitment to the business and customers by providing lacking products, in this case the eggs, from other stores or recommending other places to buy similar products. The loyalty of the customer doesn’t necessarily have to suffer, if the salmonella crisis is dealt with accordingly using the close relationship with the customer as an advantage.

On the other hand, customer trust is the basis of the small retailers’ customer relationship— customers often trust the products to be fresher, safer or even more luxury. In this sense, as expectations are high, a salmonella crisis could badly harm the image of the small retailer and the trust of a customer. For example word of mouth advertising that the small retailers depend on could be negatively affected by such crisis. However, I personally tend to believe that customers feel safer with a store that has a human face (small retailer) than a big box retailer. The small retailer’s ability to give a personal explanation and even an apology could build my relationship stronger with a small retailer. Whereas a big box store may have several brands and large variety in store, they cannot provide the consumer with the same kind of personal customer experience and level of trust as a smaller retailer can.



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