Radio Shack’s Mobile Store Experiment

Radio Shack is testing a new store model under the name PointMobl.  The three test stores in the Dallas area focus on “mobile” categories ranging from compact laptops and MP3 players to smart phones and GPS systems.

The depth of selection is greater than what a typical RadioShack store carries and there is no reference to the parent company to be found anywhere in the store or on the PointMobl website which lists the copyright owner as being “PointMobl Corporation”.

That last point is a very smart move which clearly shows Radio Shack understands where the brand sits in the minds of their target PointMobl customer.  I’m making an assumption here that they are trying to appeal to upscale, tech-savvy customers in the 18 – 35 year old range based on the store description and the images shown on the website.   Taking this “anonymous” approach removes one barrier to acceptance by those target customers.  On the other hand, the way they pitch the concept on the website sounds like the typical safe, boring nonsense that I sometimes hear coming from corporate marketing departments trying to appeal to a much broader and older segment:

“It’s time to let your mobile life out to play.  Give your productivity a power-up, stay connected, and take your inner rockstar on a world tour.  It’s time for a true mobile outfitter. One who really listens to your needs, then leads you to the right solution.”

Blech! If you are 18 – 35, chances are you are already leading a “mobile life”, you are always connected,  and when it comes to figuring out what gear you need, you do your own research because experience has shown that you usually understand the technology and the options better than the salespeople.  The rest of the copy on the site doesn’t get much better.  I should also point out that the website has at least one typographical error where they proclaim “You don’t need another mobile store – you need a good listener“.  Come on guys, any spellchecker program would have found that.

Some analysts have expressed concern about testing new store concepts under the current economic conditions.  I think Radio Shack has no choice but to explore alternatives given that a third of their existing store revenue comes from mobile sales and that business is being eroded by the likes of Best Buy who has opened their own chain of mobile specialty stores and expanded the mobile departments in over 900 of their superstores.  Radio Shack is also losing business to the mobile carriers which continue to pop up like weeds in every stripmall nationwide.  RadioShack has 6,000 company-operated and franchise stores and 700 wireless phone kiosks.  That gives them easy access to real estate that would be retrofitted into PointMobl outlets.  A slideshow of images from one of the test stores is available on YouTube:

This approach could end up generating higher revenue per square foot  than existing Radio Shack stores.  I’m fairly certain that is one of the test criteria and if the test proves this out, an expansion of the PointMobl concept could boost the chains revenue for a few years.  While that idea seems appealing, I don’t see it is a differentiated strategy that can be defended over the long term.  There’s nothing special here.

Store Aesthetics

The stores are described has being “upscale” with white fixtures and clean glass, but based on the following slide show, the interior of the store doesn’t generate that Apple store feel that I’m sure they were going for.  Instead it looks cramped and dark.  In some places, the dramatic lighting makes it seem almost museum-like; not the kind of feel that invites you to pick up the stuff and interact with it. 

The Competition

The mobile carriers all have significant presence in this size footprint and it would be extremely easy for them to expand their product offerings to include a similar product mix.  The only real differentiation here might be in the ability to offer multiple mobile carriers in one store, but that’s not unique either considering Best Buy’s strong position in the market and the growing presence of mass merchants like Walmart and Target in the mobile space.

In order for PointMobl to really be sustainable, it must be able to offer the customer an experience that no one else can.  I just don’t see that happening with categories that are already commodities.

Guitar (Hero) Marketing

aerosmithgh_lgMarketingProfsAnn Handley writes great stuff on her personal blog, Annarchy.  In a recent post, she talks about the transformational magic of Wii Tennis.

“Tennis is a ridiculously hard game, and there are a relative few who can, in the real world, reach pro status. Few of us can do much of anything well enough to attract real acclaim. But it’s a blast to try. And it’s even more fun to feel some pleasure of success from your efforts. To forget–even for a few foolish minutes–that you aren’t an uncoordinated undesirable left standing on the sidelines. That, instead, you are gifted. Talented. A winner on the court. The kind of person the captain picks first for the team.”

If you’ve played Wii Sports, you understand this and it got me thinking about why some experiences can trigger very passionate responses in people.  Videogame designers have has evolved the medium from relatively simple (albeit fun) arcade style formats to realistic 3D-like environments with genres that appeal to sports enthusiasts,  pilot wannabes and fantasy/role players.  The Wii’s interactive controller design takes that to a new level allowing the player to use physical movements to control the game.  This immersive experience puts the player on the court, field, fairway or in the case of the wildly successful Guitar Hero series, on the stage.

The question is whether or not these simulated experiences can motivate some players to try the real thing.

Beyond the numerous debates regarding the level of exercise a person gets playing Wii Sports, I haven’t seen any reports suggesting a game-inspired sporting goods sales surge, but Guitar Hero appears to be an altogether different tune.

Since its introduction on Playstation 2 in November 2005, Guitar Hero has spawned its own culture of fans and fanatics.  Just check out the number of Guitar Hero videos on YouTube.  The Guitar Hero series has been financially lucrative for Activision, the company behind the games. In April, 2008, Wired magazine reported that the franchise had sold 14 million units which equates to about  US$1 billion in sales.  Sensing an opportunity to tap into the passions of music enthusiasts following the initial launch of the game, music instrument retailer Guitar Center partnered with Activision to be the in-game virtual music store starting with Guitar Hero II.  It appears their instincts were right as the musical instrument retailing industry has seen record year over year competitive store increases since the game was first introduced.

Guitar Center recently conducted a survey which “confirmed that the majority of those who play the games are more interested in picking up real instruments, it also revealed that most musicians who play the games use their real instruments more frequently as a result.”

Guitar Center’s move encouraged others in the music business to get their products into the game (literally).  The latest versions of Guitar Hero are music marketing masterpieces with product placements by everything from bands to music publications and beyond.  On a basic level, there is embedded advertising for products from leading manufacturers like Gibson, Mackie and JBL.   These product and logo placements are both passive (a logo on the stage monitor) or active (play a Les Paul guitar).  Beyond the direct music tie-ins are lifestyle placements from brands like Axe and Pontiac, and music publications like Guitar Player and Kerrang.  From a content perspective, record labels have replaced the cover versions found on the original game with the real artist recordings.  Players are exposed to new and “new to you” music.  The more you play, the more new stuff you hear and you are more likely to listen to a song that you might otherwise turn off because you are interacting with it.  The results are impressive:

  • Sales of gear for first-timers at Guitar Center has surged.  In the holiday selling season in the last quarter of 2007, Guitar Center saw a +20.7% jump in comparable store sales for beginner-level electric guitar & amplifiers. This surge grew even stronger through the first nine months of 2008, when Guitar Center’s cumulative comparable store sales for the category increased +26.9%.”
  • Gibson said that it had seen sales on the rise, particularly those that are featured in the video games such as the iconic Les Paul guitar.
  • Digital downloads of older and more obscure music featured in the game have increase dramatically.

So at its core, what is it about Guitar Hero that allows it to not only be a great piece of entertainment but also an effective marketing vehicle and an inspiration for some to take up real guitars?

It’s all about appealing to a lifestyle.  Like the way Harley Davidson has figured out how to be a lifestyle company, Guitar Hero resonates with rock music Passionistas because it taps into that inner rockstar that so many have wanted to be at some point in their lives.  It works because it gives players a taste of an experience that they want in a way that lets them forget–even for a few foolish minutes–that they can be more than just a fan in the audience.  That, instead, you are gifted. Talented.  A rocker on the stage.  The kind of person who gets their face on the cover of Rolling Stone.

Do you have Passionistas as customers?  Are you helping them to tap into their inner rockstar?

The only important thing is…..

“The only important thing is that we make the children happy”.  It’s one of the most memorable lines from the 1947 classic, “Miracle on 34th Street”.  Replace “children” with “customers”, it is also an idea that has unfortunately faded from the fabric of American retail.  In the film, the Macy’s Store Santa makes that important point to an incredulous mom after telling her that she could get the fire engine her son wanted at a competitor.  Mom couldn’t believe that Macy’s would send customers to another store.

Fast forward to today and imagine Macy’s or just about any other retailer helping a customer find the thing they are looking for by pointing to a competitor.  It might occasionally happen, but it’s certainly not Standard Operating Procedure.  To do so would reflect badly on the store’s merchants and send business to the enemy, right?  The retail would much rather send a customer away unhappy than send them to a competitor.  But perhaps the retailer’s perspective is different from the customer’s?  Perhaps in the customer’s eyes, helping them find what they were looking for, at a competitor no less,  was an unexpected “surprise and delight“.  Might that not earn a few loyalty points?

A few years ago, a major consumer electronics retailer was testing various innovation ideas in the Boston area.  One of those ideas was to place a “concierge” near the store entrance with the objective of improving close rate.  The job had two roles:

  1. Greet people coming in and direct them to destinations in the store.  This wasn’t just directing customer to “go to Aisle 5”.  The concierge was trained to engage the customer to learn why they had come to the store.  If  “assisted selling” was involved (e.g. HDTVs, digital services), they would escort the customer to that part of the store and introduce them to a salesperson.
  2. Engage people on the way out.  If they had made a purchase, thank them.  If not, ask to assist in locating the item.  The concierge desk had a couple of internet terminals and the concierge would help the customer find the product they wanted on the retailer’s website.  They were also instructed to help the customer search for other retailers who might carry the product if they didn’t carry it!

The concierge idea was only tested for couple of months and in that time, the close rate improved, but not enough to offset the cost of the position.  With that being the company’s determining success metric, the idea wass killed.  The test also included a survey of customers to get their feedback on the experience and the results were impressive.  Roughly 85% of the 1200 customers surveyed felt that the concierge improved their shopping experience and, more importantly, The same percentage said they were likely to recommend the retailer to friends based on their interaction with the concierge.

While the test did not generate the targeted close rate numbers during the 60 days it was operational, customers really liked it.  If the company had run the test for 6 months or a year, would the close rate improved?  Who knows, but I’d argue that the improved customer experience in those stores would have resulted in higher traffic over time and that’s every bit as important as close rate.

So why are retailers so focused on the transaction and not the experience?  Because it’s the fastest thing they can measure.  Unfortunately, a change in the experience may not lead to improved business in a 60 day time frame and most retailers don’t have the patience or the confidence to invest in an improved experience for the long haul.   Paradoxically, failure to make customer experience improvements may prove to be the downfall of a many retailers in the next few years.

Are You Focused on the Transaction or the Experience (part 1)

With the economic downturn taking a toll on retailers one has to wonder what is going the be the differentiating factor for the survivors.  With people spending less across all retail channels, I heard a pundit on a financial network say last week that retailers were going to focus on taking market share away from competitors.  That sound good on paper but how exactly does one do that.

The vast majority of retailers will be going for the wallet with margin-crushing discounts and deals.  While this may be good for customers (clearly a buyer’s market), it will not be sustainable unless you are a retailer with deep pockets and those are few and far between.  The other approach would be for a retailer to leverage their experiential benefits.  Unfortunately, this approach is not something you can just whip up in time for the holidays.  If you have not been growing your customer base through great experiences, you are not going to be able to take this approach this time around.  That said, you may want to consider making changes now.

In retail, the experience your customers receive is a reflection of your organization’s culture.  An open culture that encourages, rewards and acts upon bottom-up and outside-in feedback is one that fosters engagement at all levels.  Engagement with the organization by your customer-facing people leads to engagement with the customer and that lays the groundwork for delivering great experiences.

I don’t mean to over simplify the idea of an open culture.  If your organization isn’t structured this way, you can simply mandate it.  Getting there requires real leadership, considerable effort and a willingness and ability to dedicate resources to the goal.

As the title suggests, I’m planning a series of posts on this topic.  In my next post, I’ll offer some suggestions on how to build an Open Culture and how to leverage it once you get there.

Circuit City: The Lost Years

I started my professional career as a programmer with Circuit City in 1985 and I remember vividly how very cool a place it was to work.  Not only were you part of a company that sold a cool product, but the organization treated people like family.  On top of that, consumer electronics retailing was a specialty back then and Circuit City was the king of the mountain.  There were many reasons for their dominance but the biggest was that for all intents and purposes, it was still a family business and the values that founders Sam Wurtzel and Alan Hecht built the business on were ingrained in the culture.

I’ll digress for a minute to share some very early Circuit City trivia as a way to convey how savvy a businessman Sam Wurtzel was.  Bear with me, there is a reason for this detour.  It was the summer of 1948 and Sam was driving his family to Florida for a vacation.  Coming through Richmond, VA, Sam saw a billboard announcing that WTVR – “The South’s First Television Station” was on the air.  Sam figured that with a TV station here, Richmonders were going to need a TV store.  With that as his business idea, Sam rented out a corner of a Sears tire store and went into business selling TV’s door to door.  The concept of Tryvertising has been talked about in recent years, but it’s basically how Sam approached selling TVs.  He would deliver the TV on Tuesday and let customers keep it for a week to try it out, which of course meant that they got to see NBC’s hit Texaco Theater with Milton Berle on Tuesday nights. The following Tuesday, Sam was to pick up the TV, but not wanting to miss that evening’s Milton Berle show, most customers decided to purchase it instead.  Simple idea, brilliant approach!

Sam and Al developed the WARDS TV business during the 1950’s.  The “W” stood for Wurtzel and the “ARDS” were Sam’s kids’ initials.  During the next three decades, several other store formats were experimented with. The name change accompanied a regional expansion and public stock offering in the 1980s.  All along the way, Wurtzel, and later his son, Alan, built the business on the the 4-S Model: Service, Selection, Savings & Satisfaction, which was credited in Jim Collins’ 2001 classic “Good to Great” as the differentiator that allowed Circuit City shares to perform 18.5 better than the market between 1982 and 1997.

The 4-S model was the customer lens through which every “associate” viewed their work. Whether developing software or working on the sales floor, everything you did was about delivering those four S’s to the customer. Earlier this week, The Consumerist posted a video compilation of old Circuit City TV spots from the company’s heyday years of the late 80s and early 90s.  The messages in these spots rang true then, but sound like empty promises a decade after the 4-S model was abandoned and management stopped focusing on what mattered – The Customer.  The results speak for themselves.  With a stock price now around $0.28 (yes, that’s 28 cents!) and likely to follow CompUSA into retail oblivion, it’s sad to think about how the leaders of this company were able to destroy it in just ten short years.  The comments on The Consumerist post tell the story of how the brand is perceived today.

Take a walk down memory lane (if you’re old enough), and remember that you brand is not what you say it is, but rather what your customers say based on their experience with you.

Not Expecting Great Things at Kohls

I’m a frustrated customer.  I drove to a local Kohl’s store today to purchase the Men’s Nike Air Tri-D II running shoes that they advertised in their 10/1 – 10/11 sale catalog.  The shoe department at that store was a disaster.  There were very few men’s athletic shoes on display and the shelves were in disarray.  The shoe I wanted and that they had gone to the expense of advertising, was not even on display.  I asked someone to check stock and the answer came back that they only had a size 8-1/2 in the back room.

Years ago, retailers used to practice a fraudulent tactic called “Bait & Switch” in which a desirable item was advertised at an attractive price, but in reality, there was little or no inventory to support the offer.  When the customer arrived at the store to purchase the item, they would be offered an alternative item which often provided the retailer with higher margin.  There are Federal Trade Commission laws that make that practice illegal.  If a retailer knowingly advertises a product that has limited availability, they have to say so in the ad (“quantities limited”). I understand that sometimes operational issues come up which can result in advertised products not being available and I’m assuming that is what happened in this case.  Nevertheless, it was a frustrating waste of an hour of my time.

Multichannel Retailing to the Rescue (or NOT!)

I wanted the shoes to take on a trip this week, but settled for ordering them on Kohls.com so I could take advantage of the additional discount offered to Kohl’s Charge customers.  A search of the site took me right to the shoe, but when I went to put it in my cart I saw that it was only available in sizes (wait for it….) 8 and 8-1/2!

I could understand a single store in a 1000 store chain not having a particular advertised item, but to not have enough product available through a national website is a big problem.  Kohl’s Merchandising team has to know about this.  Any merchant responsible for a line of products checks to be sure they have sufficient stock chain-wide before advertising something.  In this situation a good approach would have been to put a note on the product detail page acknowledging the shortage of inventory and apologizing for the inconvenience.

This is a great example of a really bad customer experience.  Kohl’s tells me to “Expect Great Things”, but based on interactions in two different channels (web and store), I “expect” that I won’t be shopping at Kohl’s in the future.

On-Line Banking Experience – FAIL!

In my last post, I talked about a local grocery store chain’s customer experience.  One of their innovations was partnering with National Commerce Financial Corporation in which it co-owns 35 First Market Bank branches.  Ironically, this post discusses an on-line banking experience with First Market Bank.

Yesterday, I tried to access my accounts with First Market Bank to pay a few bills.  I was able to get to the home page, but when I selected the link to sign in to my account, I got nothing.  The site eventually returned a page load error.  Frustrating, but since I had a hundred other things to do, I moved on.

This morning, I went back to the First Market Bank site to access my account only to find that the problem had not been fixed.  There was no message on the homepage regarding the problem, so I called the Internet Banking support line.  The CSR apologized and informed me that “the site was down for maintenance”.

Having an IT background, I translated that to “something has gone terribly wrong with the software and the IT support team is having a hard time fixing it”.  OK, I understand these things happen, but while the support team is busy wrestling with the problem, it’s critical that you let you customers know what’s going on.

At a minimum, the home page should be updated with a message that acknowledges the problem and provides direction for customers who need to transact business.  If, for some reason, the home page can’t be updated, the account access link should be redirected to a page with the message.  Now that the site has been down for more than 24 hours, they might want to consider sending an e-mail to their customers explaining the situation. These are simple things to do, but instead, I’m willing to bet that their call center is handling a unusually high number of calls, which in turn impacts the level of service provide through that channel.

If you walk into a store that’s in the process of remodeling, you usually see a “Pardon our Mess” sign.  If you’re web business is dealing with technical problems that impact the customer experience, put up a sign to let your customers know.

Update (9/24 6:30pm):  First Market Bank still not working, but they did put up a sign:

“First Market Bank is experiencing some technical difficulties which could impact some of our customers’ ability to access Online Banking. We are currently addressing the issue and should have it resolved shortly. Thank you for your patience.”

Thank You!