What Were They Thinking?
This is the first of what will be occasional posts to celebrate some of the truly bone-headed decisions encountered in retail decision-making. The object is to both amuse and, hopefully, help promote the idea of thinking about the "....and then what happens" ramifications before instituting a new policy. The company names have been omitted to protect the clueless.
Today's award winner is a national chain selling mattresses and related accessories.
I needed a mattress. Like over 60% of web users, I first did the research on-line and found a mattress that was what I needed and, being the mattress business, was on sale. I needed this delivered and, call me old-fashioned, but I like to have a human to talk to if anything goes wrong, so I called the nearest store location to make the purchase and arrange delivery. I spoke to an associate and described the style number of the mattress I wanted. She then quoted a price that was almost twice the company's website price for the same mattress. When I pointed this out to her, she let out a big sigh and told me that the company routinely sells products on the web at a deep discount to the 4-wall price. The logic, if you can call it that, is that, since the overhead costs are so much less with web sales, the website can afford to sell them for less than the stores. She goes on to tell me that the customers have figured this out and now come to the stores to get detailed information from the sales associates, try the mattresses out, and then go home and order them on the web for about half the price. Who wouldn't do this? Did I mention that the associates are paid 100% on commission and that the company has made a significant investment in product and sales training for the associates?
Let's see. You spend a lot of build-out capital and ongoing expense to open and operate a store location with a long-term lease obligation. Is there not enough competition out there? Do you really need your own website taking business away from the stores and commissions away from your sales associates? Do you think these associates are highly motivated? Sam Walton once said that "your customers will be treated as well or as badly as you treat your store associates". How do you think that's working out for this chain? How do you think the comp sales and ROI are doing for the stores?
What were they thinking?
I'd love to hear your thoughts on this in the comment section below. Also, if you have any candidates for the award (and who doesn't), please describe them below or drop me an email at bill@emerson-advisors.com.
PS It's just been announced that GM is going to sell cars on eBay in California. I'll bet the car dealers are thrilled.
