Contemporary Management 7th Edition by Gareth Jones,Jennifer George

Exercise 17

How B M Retailers Use IT to Attract Customers
T he growing popularity of online shopping at Internet retailers such as Amazon.com, as well as at the online stores of bricks-and-mortar (B M) retailers such as Walmart and Best Buy, is causing major changes in how managers use IT in retail settings and in how they use the skills of retail employees. 44 Today more and more potential buyers are taking advantage of the limitless information they can find on the World Wide Web to become informed customers. Buyers can search online for information about and reviews of the different qualities of competing products; they can then go to specific sites that specialize in providing up-to-date prices being charged for these products by different B M and online retailers. The availability of so much information online poses huge challenges for all retailers, but especially B M retailers because their sales reps are dealing with highly informed customers, and the ability to complete a sale often depends on the retailer being able to offer extra information or customer service compared to an online retailer.
A main challenge confronting managers of B M retailers is to use IT to improve the quality of the shopping experience and to better train their employees to provide higher-quality customer service. In the past, for example, one attraction of shopping at exclusive high-priced department stores was that salespeople would go to great lengths to satisfy customers. For example, sales reps would phone other branches to locate the right size of a dress that a client wanted and have the item shipped overnight. But today, when customers are often as knowledgeable as employees because of their use of the Web, they may just ask a sales rep, "Why don't you look online?" assuming that any retailer today would have IT that provides real-time information about where such items are located. In reality, many retail stores have not kept up with the need to use IT to improve customer service; nor have they thought about how they can improve employee training to make better use of their skills. The result has been falling store performance and the loss of customers to online stores.
So how does a retailer attempt to catch up and use advanced retailing IT, combined with better customer relationship management (CRM) practices, to attract customers back to the B M world? One way is to invest in state-of-the-art retail IT such as touch-screen terminals, LCD monitors, and high-tech interactive TVs that (1) tell customers detailed information about all the important features of the products on hand, (2) help speed up customer service and checkout, and (3) "involve" customers and help convince them they have made the best buying decisions. For example, Bloomingdale's linked up with a specialty IT company in 2007 to run a three-day experiment to use IT to help salespeople aid customers in purchasing decisions. As usual, salespeople helped customers select new clothing; but after the customers tried on the clothing, they paraded before an interactive three-way mirror connected to the Internet. This lets family members and friends who were online see and comment on the different clothing selections, and the customers could use their extra input to make final clothing choices. 45 In 2010 retailers were expected to spend over $1 billion on new in-store IT to improve the shopping experience and keep customers coming back to B M stores. Another way B M stores can use IT to better serve customers is to find ways to link their stores' online sites to the B M stores to encourage customers to think of both kinds of stores as two integrated parts of the same business. Similarly, Bloom Supermarkets, owned by Food Lion, has adopted a novel approach to suit its food business: It has developed an interactive wireless shopping cart that records the nature and dollar value of the items customers put into their carts so they can keep track of their purchases.
The other main way B M companies can compete with online retailers is to make better use of their employees-especially by training employees so they have more information than IT-savvy customers and can provide services that online stores cannot-such as profitable extra services like home setup, service, and repair. Best Buy, for example, decided to retrain 30% of its top salespeople so they would not only possess detailed information about the products in their own departments (for example, PCs or flat-screen TVs) but also know how to match products across departments (for example, to help customers decide which printer is best for a PC that has a certain kind of graphics card). The goal is to give customers extra information that makes a difference and so encourage them to make their purchases in B M stores as well as to believe it is worth their while to come back in the future.
Indeed, another advantage of investing in high-quality customer service is that using IT to bring customers into the store, either to pick up products or to gain better advice, is a major source of extra sales. Why? Customer reps are trained to inform customers about the accessories that will help them better enjoy their purchases (type of protective case for a laptop, or newest video games for a game console). And in B M stores that offer a wide array of products, such as Best Buy or Walmart, customers often explore different departments and make extra purchases-such as a pack of $10 energy-efficient light-bulbs or a $2,000 HDTV. These extra purchases contribute significantly to a store's performance. Walmart, for example, which developed an online-to-B M store program in select stores in 2007, found that it increased the number of customers by 20% and that they spent an extra $60 during their pick-up visits! 46
Search the Web to discover how Amazon.com has recently adopted methods to increase its level of customer service.