Category Archives: Retail

Has the Best been Bought from Best Buy?

StorefrontBacktalk recently ran a couple of pieces on Best Buy that followed up their recent pieces on “Best Buy’s Black Friday Fiasco” and “Best Buy’s Wifi Porn”, which was expanded upon by SI in its recent posts on how if you wanted a best buy experience, you weren’t going to get it at Best Buy (Part I and Part II). In its first piece on “Best Buy’s Last Hope”, the author says that Best Buy has one shot — an expensive, painful, highly disruptive shot — to truly turn itself around. It must embrace customer service in-sore to an extent that would make Nordstrom, Trader Joe’s and Whole Foods blush. That means store associates who are true experts in the electronics they are selling.

Frankly, I don’t think this is going to happen. The mentality would have to change from “who will work for us for minimum wage and pretend they know enough about this product to actually sell it” to “where can we find someone who knows what they are talking about, is passionate about the products they sell, and will actually work for us as a sales rep” and “what is it going to take to get that kind of people”. Right now, the type of service I’m used to is “this isn’t my department, you’ll have to find someone that is working in this department” to queries as simple as “can you tell me if you still have any of this product in stock” (which any associate can do simply by logging into one of their terminals and doing a query) or, my favourite, in response to “I’d like that” (pointing to something in a cage). Get the key, open the damn cage, give it to me and/or walk it to the cashier. An untrained monkey could do it! (And monkeys are smarter than you think. Pete the Monkey taught himself to do dishes.)

Plus, as the author notes, they would probably have to fire most of their staff and replace them with Apple-store caliber employees. And any employee of that caliber is probably going to go work for Apple or, if they prefer Windows, Sony where knowledgeable associates are preferred.

After all, as the author notes, they currently think they can win a price war with Amazon. A company with massively deep pockets, minimal physical overhead (compared to a retail store chain), and a willingness to go eight years without turning a profit just to conquer a market. Winning a price war against Amazon in the electronics space is not going to happen. Amazon can, and will, win on margin every time if that’s what it takes to be the next major electronics retailer and put Best Buy and its competitors out of business. (And it won’t be hard when it’s customer service reps often give better service over the phone than Best Buy associates in store!)

The other piece that got my attention was that “Best Buy Planned Outages Due to Its Move to the Cloud”. If you believe the hype (and the doctor does not), the whole point of moving to the cloud is so that you don’t have outages. But the most ironic aspect to this story is that Best Buy is cutting Amazon a check for its cloud efforts. They might as well just sell to Amazon.com now and become Amazon’s mobile presence. One little glitch and a propagated purge command and — voila! — no more Best Buy online. (Not that it would make a huge difference anyway. What good is a web store that a growing portion of your market can only order one item from at a time anyway? [See Best Buy Experience? Not at Best Buy! Part II.] the doctor is now ordering more electronics from the local office supply depot because their web site actually works! And if you send them an e-mail, customer support actually responds! On the other hand, it seems that Best Buy’s method of dealing with problems is just to ignore them. It’s not a problem if you don’t recognize it, right?)

The nostalgic part of me would like to say that Best Buy still has a Bright Future, but, in the doctor‘s view, the only chance of Best Buy lighting up the sky is if the same thing happens to it as happened to the Buy More in the season three finale of Chuck. The way things are going, it’s going to be closing 50 stores on a regular basis. And I don’t think China’s going to save it. If Best Buy truly takes off in China, there’ll likely be so many indistinguishable clones in three months that it will just be hastening its demise.

Best Buy Experience? Not At Best Buy! Part II

Yesterday’s post recounted the recent problems that has had Best Buy in the sights of Storefront BackTalk, which include coverage of how Best Buy is “Making the Same Data Mistakes Again”, while being the latest example of a “Black Friday Fiasco”, and offering free “Wi-Fi Porn” to minors in its store. And the last story was the doozie — not only can it apparently not keep its own in-store networks secure enough to prevent porn from being displayed on HD TVs for half an hour, but when a customer asks for the manager, he’s told “You want to see the manager? You go get him. He’s over there.”.

As far as examples of bad customer service go, that’s a response that always take the cake. So, not only does their IT suck, as highlighted by their now not-so recent website update to BestBuy.ca which prevents those of us still on Mac OS X 10.6 from adding more than one item to our cart for a purchase (which we can only do if we log-in first), but their customer service, in-store and on-line leaves much to be experienced. So, not only can we buy only one product at a time (which is a great inconvenience if we want to buy five items, as this would require five separate session and purchase processes, but a cost-prohibitive inconvenience if the items are small as multiple purchases means multiple shipments which means multiple, unnecessary, shipping charges), but they don’t seem interested in doing a damn thing about it. I reported the issue back in the end of January when I first noticed it, received an e-mail saying someone would contact me within 2 days, but over a month later, still no response. I reported it again last week when I again tried to purchase more than one item (with no luck), got the same e-mail, and again no response.

But it’s their in-store customer service that takes the cake. I’ve been to the new Best Buy in Halifax exactly three times, and each time was a customer service nightmare. I’ll just describe the last visit, last week, as it was just a repeat of the problems I experienced in the first two visits, with a few extra aggravations thrown in.

This time, I went there to return an item I ordered in early February that was defective before my time ran out as I would otherwise have to deal directly with the manufacturer directly (which was not a pleasant thought given that they have been in financial and media trouble lately and were certain to be understaffed in their customer service department). Best Buy allows you to return / exchange items in-store that were ordered online and this sounded preferable than trying to deal with an agent over the phone to explain “it literally shorted out”, try to get a pre-paid shipping box, try to insure that someone actually processed the item when it was returned, etc.

So I go to the store. I explain the situation, show my on-line receipt, and ask to exchange in-store (because I know they had stock) as I only had a couple of days left before their return policy expired on the item. The rep said “sure, but you have to go back to computers and get the replacement — I can’t leave the desk”. Huh? You can’t leave or call back and get someone to get it? O.K., Fine. So I go back and ask an associate to get me the item, behind a glass door, right in front of me. First thing, “I don’t think we have any more of those”. They were right there and I was pointing at a row of three. “Oh, well, I have to go get a key.” Fine. I wait, and wait, and five-or-so minutes later notice him half way across the store talking to someone else, with obviously no interest in trying to track down someone with a key. So, I wait for another associate to become free, ask if he can help me, and note the item I want is in the case. He says sure, follows me to the product, and says “Oh, I don’t have a key for that. I’ll have to get someone behind the desk.” So I wait a few more minutes, and finally someone comes and says “What can I help you with.”. This associate should know, as I explained it to the associate that fetched him, and then again I get “Oh, I need a key. I’ll have to call the manager.” Well, I guess that’s progress as he actually called the manager, but it took three associates and over ten (10) minutes to get a product out of a case that the customer knew he wanted. Had I been trying to buy it for the first time, I would have given up and went to a different store.

But the fun didn’t stop there. The manager hands the item to the associate, who brings it to the desk, and on my return, the associate says “I can’t do this return, as the item was purchased on-line, and I haven’t been shown how to do that, I’ll have to get someone else”. Uhmm? I told the associate it was purchased online before the associate said she could do the return. Fine. Wait for another agent, who goes through most of the return process only to mumble something along the lines of “Oh, it’s above my limit, I need a manager’s authorization.” The price was clear on the receipt. So I wait again. Finally, after a few more minutes, a manager comes buy, punches in a code, and walks away. And after some stumbling (which, based upon prior experience, makes me want to swear that they didn’t train anyone on their own systems), finally completes the exchange.

And the fun didn’t stop there as I also wanted to pick up a game for my son. I should have tried the games store across the street first, but I happened to have checked the on-line system before I left and knew there were over 10 in stock when I checked the quantity reported on the website earlier that day. I go to the section where the games are, and where I believe it should be, only to find it’s not there. I ask an associate in the section as to where it is, only to hear him say “I don’t work in games. I think it should be here”. This was annoying, but not as annoying as him taking me to a section for games for a completely different console by a manufacturer. So I take him back to the section and say “It should be here, as this is where the other games are for this console, but it’s not. Where else could it be?” I’m told “if it’s not here, we don’t have any” and he walks away.

Since I couldn’t believe they’d sell 10 in a day as it was not a brand new release, and there was no sale on, I go to the back of the store, find a tablet with working Wi-Fi (which, I’m happy to report, appeared to be porn free), go to their mobile site, pull up that there are still nine (9) in the store, go back, find the associate, and tell him this. He stumbles around, fails to find it, so decides to ask the customer service desk if there are any in stock (and ignore the fact that I just checked their online system less than five minutes ago). They say yes, and when he asks where, they say they don’t know. He says I’ll have to ask someone who works in games, but that he doesn’t know if anyone’s working in games tonight. Great. So I decide to check ends of rows, displays, etc. and basically wander around until I eventually find one. Then I go to the cash, where the cashier, of all people, tells me (when she is struggling to get the security device off of a $40 game) that it would have been faster if I had just came to the cash and asked for one to be pulled out of the locked game cabinet next to the customer service desk. That’s right, the customer service agents apparently didn’t know about the game cabinet right beside them! (And this wasn’t even the most ridiculous customer service experience. On my first visit, where they didn’t know how to process an American Express card, which, as you know, has the security code on the front, and not the back, the associate also didn’t know how to listen to a customer who repeatedly tells him: “No, the security code for AMEX is on the front – you can type the numbers on the back as many times as you like, it’s not going to work”.)

So what is the lesson to be learned — it doesn’t matter how good your supply management organization does if the retail / merchandising side can’t get its act together. Because, at some point, customers will get fed up with the bad customer service and go elsewhere (as I have with most of the electronics I order on-line — I like the selection, price, and/or speed of delivery less, but it’s still less aggravating dealing with these sites). That’s why Supply Management has to make itself the go-to organization that other organizations in the company come to for advice. This is the only way that it will be able to insure that best practices are applied down the chain as well as up, as, otherwise, all of its effort to source quality product won’t mean squat when customers won’t be able to put up with the shoddy experience of trying to acquire the product and just give up entirely.

Best Buy Experience? Not At Best Buy! Part I

It would appear that Best Buy is in trouble. And not just because Storefront Backtalk has been covering one problem after another on their web site about how Best Buy is “Making the Same Data Mistakes Again”, while being the latest example of a “Black Friday Fiasco”, and offering free “Wi-Fi Porn” to minors in its store. It is in trouble because they obviously cannot get a handle on their IT, despite trying to be a major provider of computers and electronics across North America.

But first, let’s recount the problems Storefront Backtalk has already told us about.

1. They’re still living in the “Wild West” and making the same data mistakes again.

How could an organization end up with “50 or so applications running on the cloud with absolutely no governance whatsoever”? That just boggles my mind. Maybe it’s the CTO in me, but I couldn’t even imagine 5 applications running untethered on the cloud. And not just because I’m not all that fond of clouds, which do have their uses when correctly applied, but because it doesn’t matter where your applications are — they still need to be managed, backed-up, and secured. It is, or I thought it was, just good old-fashioned common sense.

2. They sold product they did not have in their latest “Black Friday Fiasco”.

Not only did Best Buy take way more orders than it could fulfill for certain items on Black Friday, but it waited until a few days before Christmas to cancel those orders. Talk about a crushing blow to a customer, who has already been charged, and who thinks that special Christmas gift they bought a special someone is on its way. And talk about an insult when, instead of refunding the purchase, you send the distraught customer a Best Buy gift card. This is definitely a violation of trust. But even worse, one might be able to argue that this is a violation of the Uniform Commercial Code as the acceptance of payment can be argued to constitute a contract, which would mean the seller (Best Buy) would be obligated to transfer and deliver under Sec. 2301 or terminate with reasonable notification under Sec. 2309. The question is whether or not terminating almost a month later after accepting payment is “reasonable”. I’ll leave that to the lawyers, but note that as if this wasn’t bad enough, even in January, they cannot say what happened. This leaves one to surmise that they have some major IT problems, and won’t own up to them, which is not a good thing in the doctor‘s book.

3. It’s inability to implement simple Wi-Fi security resulted in a South Carolina store showing pornographic images on its large-screen TVs three (3) times in twenty-four (24) hours in it’s latest “Wi-Fi Headache”.

And one time, on February 12, the images were displayed at the Greenville location to children in the store for a full 30 minutes! And Best Buy has not offered a definitive explanation as to what happened. The story was changed from “two individuals accessed our store’s wireless signal to broadcast inappropriate content on a smart television display” which would require a wi-fi hack (unless they didn’t secure it in the first place) to “accessed a product display wireless signal” which would mean that just the “smart” TV’s were hacked to receive signals directly from a mobile phone. Further details indicated that “one of the signals in our store wireless system, specifically the one for product displays, was accessed”. But was that the case when Best Buy was “inviting people to come in and select whatever they wanted on their device and show it on the big screen”. Regardless of what happened, it looks like “store management didn’t have an immediate way of halting the porn displays” and that’s a serious problem. Especially when it has still not addressed how it will prevent this problem from happening again. But the worst part of this story is when a customer subjected to the images asked to speak to a store manager, the associate told him “You want to see the manager? You go get him. He’s over there.”. When it comes to customer service, how much worse can it get?

And that’s the real problem with Best Buy, as will be elaborated tomorrow in Part II.

Is Your Dumpster Full of Dollars?

And I’m not just talking about the significant savings opportunities that can come from optimizing your trash pick up with a good spend analysis, as discussed in SI’s recent post that asked [IF] You Know How Much Your Trash Costs You? An average retail chain will write of a lot of damaged inventory and discard it in the dumpster when, in fact, that inventory, if repaired, or, typically, returned in a timely manner, could result in significant dollars back in the retail chain’s pocket.

As pointed out in a recent post over on the Supply Chain View from the Field on “Reverse Logistics: What happens to all of those product returns you’ve been making, anyway?”, what typically happens with a return that could result in a credit to the retailer is that it ends up in many cases going into the dumpster even though, in many cases, the product is still good. This happens for a variety of reasons. The store manager doesn’t know that a return to the manufacturer will result in a credit. The store manager believes it will cost more to process the return than discard the item (or, if the store manager is lucky enough, sell it to a flea market). The store manager knows that there is money that is probably worth going after in the return, but has to use a new returns management / liquidation system that they don’t know how to use and can’t figure out on their own because it’s clumsy or ill-defined (like the SARS system that has been pushed down to individual stores by Home Depot and that could spell the beginning of the end). Or maybe they can figure out how to record the damage, get a pending credit, but lose the credit because they don’t process, and (bar)code the return properly.

Returns, which can often be refurbished, repaired, re-sold, or in the case of a NPI (New Product Introduction), returned to the producer/manufacturer within a certain timeframe for a full refund as per the contract, may not have the profit potential of a product that is not returned, but they still have profit potential and, most importantly, when properly managed, do not result in expense and loss. Proper reverse logistics and returns management, which is standardized, near real-time, and provides multi-channel visibility (as discussed in this post which brought you Reverse Logistics Tips from World Trade Magazine, significantly improves the bottom line and should be performed by every retailer and reseller.

For a few more tips, check out Rob Handfield’s tips from his post on “Reverse Logistics: What happens to all of those product returns you’ve been making, anyway?”.

It Starts By Remembering that an ARS is Used to Carry a LoAD, Not a Store. (HD Part V)

Last week we discussed the recent snafu made by Home Depot during a recent upgrade to its online website on February 1st that “Left Home Depot Customers Running in Circles” and chasing their tails due to incomplete planning and testing. We noted that, despite the fact that it was breaking news for some analysts and bloggers, it is not something Home Depot needs to be concerned about. However, as discussed in following posts, Home Depot does have some serious technology-related problems in the doctor‘s view — problems that it may not even be aware of which, if left unchecked, may only amplify as time goes on. However, as discussed in our last two posts, the problem has an easy solution, and it starts by rolling back SARS and retrenching to ARS at the Local Area Depots.

Done right, an Automated Replenishment System (ARS) is the foundation for next generation inventory management. Just ask any inventory management software vendor (including SYSPRO, that was reviewed here on SI in this post and this other post). However, done right requires that the implementation follow a few simple rules

  1. Forecasting at the item level is only done across a geography
    Trying to forecast item demand at the depot, and especially at the store, level is like trying to forecast the performance of an individual stock. It’s more or less impossible. For an item that moves erratically, a single purchase can shift the entire demand pattern. However, just like the performance of a broad mutual fund across an industry will be consistent over time, so will a forecast across aggregated demand across multiple Local Area Depots and the stores they serve.
  2. Forecasting at the depot level is only done across a short time span
    Again, while the demand for many depots will be predictable with reasonable accuracy, the demand at a single depot will not be predictable with reasonable accuracy over a long period of time. So, the more fine-grained the forecast, the shorter the term the forecast must be for.
  3. Forecasts can always be overridden and adjusted by the depot category manager
    No algorithm is intelligent. Not even close. An expert, who knows of a(n upcoming) promotion, change in local tastes or fashion, or trending feedback on product quality will always have the upper hand on certain items at the local level. Thus, the system should allow the local category expert to override each and every forecast and pull rule as circumstances dictate. As the rules get more fine-tuned, the need for this will decrease over time, but there will always be a special situation.
  4. Forecasts and Rules are reviewed and updated on a regular cycle
    As per our last few posts, the forecasts and rules assume at the minimum a predictable, if not a perfect, world — and the world is never predictable. The system will have to be adjusted as time goes on.

Furthermore, if the retailer insists on maximizing use of the system across each and every one of its locations, including retail stores, then the ARS must be restricted to suggest mode. In other words, there’s nothing wrong with using the rules engine and forecast models to suggest what inventory should be ordered, when, and in what quantity, but the order for any item must be presented for review by the appropriate category or department manager, and corrected if required. Thus, there should be human involvement at the end of each and every order cycle. If the category or department manager knows that only certain items have been presenting (potential) issues, the manager must be able to quickly review the suggested orders for those items, make any mods, and then accept the entire order for submission. In other words, if the system has been doing a good job on the widget category, the category manager shouldn’t be forced to review the widget category on every order, but should always have the option just in case she has an inkling. However, if there has been a continual stock-out of sprockets, the category manager should be able to up the order, and, if necessary, change the rule at the local level (subject to review of the depot manager or category manager if required).

And it must be extremely easy for anyone to report an error in inventory count or historical data at any location so that model, and forecast, is corrected as soon as possible. Without accurate data, the system will never work.

That’s the secret to a successful implementation of an Automated Replenishment System — don’t set it and forget it and don’t force it where it doesn’t fit. Monitor and adjust it continually, and as time goes on, it will get more and more accurate with less and less adjustment for any items with steady trends, leaving forecasters free to focus on fashionable or seasonal items in an effort to truly minimize stock-outs and maximize sales.