Monday, January 24, 2011

Customer Service - The Difference Maker in Food Retailing

By George Latella, Professor of Food Marketing at Saint Joseph's University

If you are over 40 years old, you remember the milkman, Sunday being a day of rest, reflection, and grocery stores being closed. And that all retailers valued customer service and a personal connection with their customers. Most of these stores started as a corner family store. They knew their customers on a first name basis. They lived in the same neighborhoods, sent their kids to the same schools, worshipped together, and “worked together” during good times and bad. Many of the store owners would “pay it forward” by establishing a tab for clients that might be out of work or between paychecks. They would sponsor youth sports team and know the kids that were on the team. Maybe they even coached the kids. Many of these kids eventually worked in the store as stock boy, clerk or bagger.

In 2011, customer service seems like a lost art, especially with food retailers. Over the past 20 years we have seen both manufacturer and retailer consolidation. Companies made strategic decisions to buy, sell or merge. Everyone thought that bigger was better. “We are going to get synergy across our entire supply chain” would be the rallying cry of the acquiring CEO. As a result of the growth, many of these superpowers talk about customer service and the customer experience, but often cut this piece of the customer experience out all together or water it down to the point of no return with customers.

At the same time grocery stores cut customer service, we have seen continued channel blurring.  Everyone is selling food! From dollar stores to drug stores to club stores to limited assortment retailers. How about home improvement stores, electronics superstores (Best Buy), mass merchandisers (Wal-Mart, K-Mart, Target).  Schools, day care centers, the waiting room at your car dealership, etc.

While excellent customer service and delighting the customer are not the sole space for smaller retailers to dominate, it does seem like the companies we continue to talk about delivering excellent customer service are the smaller ones.

So the question becomes, who do you want to anchor your shopping centers?  We often talk about the big “W”’s in retailing in the Northeast. We have Wal-Mart, Wegmans, Walgreens and Wawa.  Everyone knows Wal-Mart, and most know Walgreens.

Wawa is a regional powerhouse in the Mid-Atlantic and can be described as part c-store, part food service, and now also gasoline. To consumers in Pennsylvania, New Jersey and Delaware, Wawa is now a food store that sells gasoline. To consumers in Maryland and Virginia, Wawa is a gas store that sells food. Either way, their goal is to deliver legendary customer service. However, their business model going forward is to establish free-standing locations in high traffic areas.

Wegmans is a family-owned grocery store headquartered in Rochester, New York that has developed a cult-like status as it has expanded southeast to Pennsylvania, New Jersey and Maryland.  While they have less than 100 stores and are adding about five per year, we always talk about them as “best in class.” They have a great private label program, great perimeter products and merchandising (customer service in every department), have NO self-checkout (personal interaction), and always have extra people at the front end and throughout the store. They are an “open book.” In other words, Supervalu, Kroger, Safeway, Ahold and Delhaize can see what they are doing with regard to assortment, merchandising, store layout, etc.  They can read the social media sites that document consumers’ love affair with Wegmans. While they do deliver great products, smartly merchandised and creatively communicated, they truly value their store associates and DRILL customer service into all of them from part timers, to college co-op students to full time employees.

Or maybe it’s Trader Joe’s or Whole Foods… Whole Foods has established a great position in the market with their customers. Trader Joe’s delivers a memorable experience for their shoppers. From their print advertising to the attire and attitude of their customer service staff, they always put the customer first. 

I am not sure who we will be talking about in 20 years, but I do know that those retailers who understand and value customer service will be at the top of the list.

George Latella is a Professor of Food Marketing at Saint Joseph’s University. He previously worked for Tastykake for 23 years in a variety of Executive Sales & Marketing positions including Director of Marketing, Director of National/Key Accounts, and Director of E-Commerce & New Business Development. He can be reached at glatella@sju.edu.

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