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.

Tuesday, March 17, 2009

Investment in customer experience key to survival

(Using the downturn as an opportunity)

I chose this article because it gives an interesting perspective of how to deal with the downturn in economy. Like many other businesses in recent months also Home Depot is facing the negative effects of a recessionary economy . But rather than being cautious and only focusing on day to day cost cuttings as many others chose to do , Home Depot also sees a certain opportunity.
While its customers are spending less, Home Depot has been spending more on serving them.
It is currently investing in new training programmes for store staff and hired more than 3000 licensed plumbers and electricians to provide not only employees but mainly customers with greater expert advice. It also channelled $250m into funding more staff working hours at its 1,950-plus US stores. Furthermore the spending on store maintenance and staff incentive programs can also be seen as having a positive effect on better customer experience.
So the point is that although there are some major reductions going on as underperforming stores and business divisions are getting closed(for example 48 stores focusing on high end home improvement were closed) and jobs are getting cut( 2000 jobs but not in customer facing positions), all this isn’t directly based at the expense of the customer . Whereas a lot of other business raise their prices, shorten its assortments or are simply anxious to offer greater privileges in service, HP has ventured a different approach.
(Overall the cuts resulted in about $153 m but were welcome by analysts.)
I think its efforts to use the downturn to focus their attention and resources on things that really matter , namely the customer, will probably not only enhance its financial figures in the short term but also strengthen HD’s position on the market in general.
As the article says HD has been losing ground to Lowe’s as regards customer satisfaction but is already starting to gain market share again.
Of course it was dangerous to restructure their RVP given the circumstances but at the same time they are heading for something which is more and more important in general and not only in the home improvement industry. It’s the customer experience which I guess is becoming very important these days as so many competitors are sparing no effort to adapt prices or products.
Why did IKEA became so successful? Of course not only because of cheaper furniture but for a whole new experience for the customer. Eating lunch in a hall selling furniture wouldn’t be the nicest thing to do one would initially suggest but still it worked out perfectly.
Of course you can’t compare both companies as they pursue a different notion of experience but what I simply want to say is that it seems HD is on the right track as future is concerned as it can easier diversify through something essential these days.


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