Dealing with Customers Who Don’t Pay

Posted on June 19, 2013 by bermanevansretail
Retailers must periodically deal with customers who do not pay their bills in a timely manner. There are several approaches to this situation — some more confrontational than others.
Here is one set of suggestions from Michael Hess, writing for CBS MoneyWatch:
  • “Don’t get angry, vengeful, or personal: This is mistake No. 1 — immediately thinking of, and treating, a past due customer as an enemy or deadbeat. For sure, there are some sleazy operators out there, but more often than not, if a good customer has an atypical payment problem, it’s because he either faces a short-term crunch or is in real trouble.”
  • “Work with the customer, not against him: To the greatest extent possible and appropriate to the situation, you should continue to treat the customer like a customer. Be friendly and understanding, and try to come up with options and plans that might resolve the situation with minimal pain and unpleasantness.”
  • “Communicate often, in writing, and keep records of everything. Always start with a non-threatening written message pointing out the delinquency and asking for the courtesy of a prompt resolution by a specific date.”
  • “Turn to a collection service only when all other efforts have been exhausted: Turning an account over to an attorney or collection agency should be an absolute last resort.”
  • “Adjust for the future: As with everything, learn from your experiences. If your policies, the nature of your business or customer base, or other factors are pushing too many accounts to the wrong side of your receivables aging report, make changes.”
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Illustration by SKOOBA DESIGN
Posted in Part 5: Managing a Retail Business, Part 7: Communicating with the Customer | Tagged , , , , , , | Leave a comment

How Costco Keeps on Clicking

Posted on June 18, 2013 by bermanevansretail
Costco is one of the world’s master retailers with a unique strategic approach. It has a no-frills, deep-discount philosophy — yet, it still treats its employees really well (as we have reported before).
In recognition of Costco’s prowess, the company is the subject of a recent Businessweek cover story by Brad Stone. Here are some of the highlights of his story:
  • “Costco, the second-largest retailer in the U.S. behind Wal-Mart, is an anomaly in an age marked by turmoil and downsizing. Known for its $55-a-year membership fee and its massive, austere warehouses stocked floor to ceiling with indulgent portions of everything from tilapia to toilet paper, Costco has thrived over the last five years. While competitors lost customers to the Internet and weathered a wave of investor pessimism, Costco’s sales have grown 39 percent and its stock price has doubled since 2009.”
  • “Costco pays its hourly workers an average of $20.89 an hour, not including overtime (vs. the minimum wage of $7.25 an hour). By comparison, Walmart said its average wage for full-time employees in the U.S. is $12.67 an hour. Eighty-eight percent of Costco employees have company-sponsored health insurance. Costco workers with coverage pay premiums that amount to less than 10 percent of the overall cost of their plans. It treats its employees well in the belief that a happier work environment will result in a more profitable company.”
  • “The Issaquah (Wash.) headquarters, 20 miles from Seattle, radiate frugality. The floor of the executive wing is covered in faded blue carpet, and in the boardroom, six faux-wood tables are jammed together. On the walls are several Van Gogh and Picasso prints (less than $15 at Art.com), along with two badly staged photographs of the company’s board of directors.”
  • “No-frills is the defining style of Costco around the world. Each store stocks around 4,000 different products, and almost everything is marked up 14 percent or less over cost. Items like diapers, suitcases, and wine, which it sells under its in-house Kirkland Signature brand, get a maximum 15 percent bump. All of the stock sits on industrial shelving or in piles that spill from pallets.”
  • “After accounting for expenses such as real-estate costs and wages, Costco barely ekes out a profit on many of its products. Eighty percent of its gross profit comes from membership fees; customers renew their memberships at a rate of close to 90 percent, the company says. It raised its fee by 10 percent in 2011 to few complaints.”
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Posted in Global Retailing, Part 1: Overview/Planning, Part 2: Ownership, Strategy Mix, Online, Nontraditional, Part 3: Targeting Customers and Gathering Information, Part 5: Managing a Retail Business, Part 6: Merchandise Management and Pricing, Part 7: Communicating with the Customer, Part 8: Putting It All Together | Tagged , , , , , , , , , , , , | 1 Comment

How Well Are Multichannel Retailers Performing?

Posted on June 17, 2013 by bermanevansretail
As more and more retailers operate as bricks-and-clicks firms by offering physical stores and online shopping to their customers, it is important that those retailers assess how well each operation is doing.
Through its research, Harris Interactive has found some interesting information:
“Measuring many online retail brands for the first time in the 2013 Harris Poll EquiTrend® Study shows that where EquiTrend measures the brick-and- mortar and E-retailer, or ‘E-tailer,’ sides of a single brand, the E-tailer side lags. The study, which assesses more than 1,500 brands across over 155 categories, specifically looks at key retail sectors including: E-retailers, hardware and home merchandisers, and mass merchandisers.”
“With the growing competition from Amazon.com across all sectors in which it competes, brands like Target, Best Buy, Wal-Mart, and others are looking to understand how to better compete against this ubiquitous retailer. Results from the 2013 study show that many retailers have a way to go; specifically, for most brands measured, the local store outperforms its online counterpart. Retail brands with the largest gap between brand equity scores for their brick and mortar and their corresponding online brands include Target, Office Depot, Walgreens, and Best Buy. Lisa Mulyk, Vice-President at Harris Interactive says that ‘shoppers tend to want to interact with the physical merchandise prior to purchasing, it and the 2013 EquiTrend data shows us that while consumers are shopping online, their brand experience when doing so tends to be lower than their in-store experience.”
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Posted in Online Retailing, Part 2: Ownership, Strategy Mix, Online, Nontraditional, Part 3: Targeting Customers and Gathering Information, Part 4: Store Location Planning, Part 5: Managing a Retail Business, Part 6: Merchandise Management and Pricing, Part 7: Communicating with the Customer | Tagged , , , , , , , , , , , , , , , , , , , , | 1 Comment