When Customer Focus Gets Blurry
Whatever happened to the customer? It’s a question I’ve been asking myself more and more lately, and one that more than a few national brands should be working harder to answer. At a time when retail is evolving in exciting ways, one of the most disappointing trends over the last several years is a conspicuous (and costly) lack of focus on the customer.
Retail used to begin and end with the customer. Perhaps it’s because we are talking about larger and larger retail conglomerates, or because we are seeing venture capital investors getting more involved in retail real estate, but many companies seem to have lost the laser-focus of retail’s oldest rule: The customer is always right.
For some brands at least, it’s clear to me that retail has become more clinical and focused more on finances, with other priorities getting lost in the shuffle. For example, J.C. Penney’s recent issues at the corporate level have keep the company from maintaining a clear focus on rebuilding its customer base — which only happens one positive experience at a time. Infighting has led to a type of paralysis that is keeping any leader from making the ground-up changes needed for their success.
JCP is hardly the only culprit. When Hudson's Bay announced the purchase of Saks Inc. for around $2.4 billion in June, one of the biggest messages that came out of the deal was that much of the “value” of the acquisition was in the real estate. There was significant talk about real estate positioning and not enough about what this would mean for the customer. I think even real estate professionals understand that the value of a retail real estate portfolio is both distinct from and dependent on the value of a retail brand. Neglecting the latter for the former is a recipe for disaster in the long run.
It’s a lesson that brands like Kmart and Sears have yet to fully absorb. It’s not a coincidence that Sears chairman Ed Lampert has always maintained that the company’s value is in the real estate. In fact, in some respects at least, Kmart and Sears haven’t really been run as retailers for some time now. And it shows.
I also wonder about the role of private equity in cases like these. It’s not really reasonable to expect the “money guys” to have customer experience and retail instincts. With the emphasis on fast turnarounds and quick returns in the last 5-10 years, there is generally less patience these days for building (or rebuilding) a brand over the long haul.
On the flip side of the coin, we see brands like Whole Foods, Sprouts, Nordstrom and Neiman Marcus: chains that do care deeply about the customer and have experienced great success with a customer-focused model. In fact, if you look at industry leaders and successful and iconic brands in virtually any retail category, you’ll see brands that have consistently leveraged a customer-focused approach to positions of leadership in the market. Walmart and Target are classic examples, and brands like Walgreens in the drug store sector and Apple in technology have been equally celebrated for their customer-focused products and services.
To be clear, it’s not just about making and selling products that customer want and need, it’s also about the customer experience: the service and amenities and ambiance. Particularly at a time when brick and mortar has to compete more and more fiercely with online retail, that subtle appeal can make all the difference. As we saw recently with Lululemon, consistently positive customer experiences can help build the kind of phenomenal brand loyalty that can endure even an embarrassing and high-profile scandal. For a less customer-driven company, a similar product “malfunction” could have had a much greater impact.
What do you think? Is the customer getting lost in the shuffle, and is the problem getting worse? Is a lack of customer focus the guilty party in the demise of some formerly iconic and influential retailers? Leave a comment below or send your thoughts to Jeff@JeffGreenPartners.com and continue the conversation.
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