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How a Department Store Lost its Customer Base

Written by: Michael Shays

Article Overview: You have to care about your ¬customers, or you will never ¬understand them. If you don’t understand them, you won’t know how to serve them, and if you don’t know how to serve them, they won’t come back. The key is knowing your neighbor.

How a Department Store Lost its Customer Base

How a Department Store Lost its Customer Base
Michael Shays CMC

Many years ago my wife and I were shopping in our village in Connecticut and were drawn into one shop because of the dresses in the window. One dress in particular caught our attention. My wife tried it on, liked it and decided she would buy it. I thought she looked smashing in it. The sales lady agreed, but she did not want to sell the dress to my wife after she found out where my wife planned to wear it. Someone else who had purchased an identical dress was going to wear it at that same event.

There were over 20,000 people in our village then, and it was smack in the middle of a market of 250,000 other people. Yet shopkeepers and others knew their customers. Bank tellers knew you and addressed you by name. You felt local businesses were in touch with the community. We didn’t buy that dress, but we shopped at that store many times until we moved to California, and once even when we came back to visit in Connecticut.

I was thinking of this experience when a client asked us to report on the feasibility of reopen¬ing a branch of their department store chain in a small city of 8000 people. They had closed the store because it wasn't attracting enough customers. It was the only show in town the only store of its kind for 45 miles in any direction - yet this store was draining corporate cash, a luxury the chain could no longer afford. So they shut it down.

After a visit to the city it was obvious that the void left in the marketplace by closing the store had not been filled, and people in the city wanted a replacement. Was it simply that the market wasn't large enough to sustain a large store?

We determined that the market, including the ¬immediate surrounding communities, was large enough. The income level of over half this market was a match for this department chain. The location was easy to get to, and there was plenty of parking. The community wanted a store there. The local economy was good. The future growth of the area looked encouraging.

Yet after all this, we couldn't tell the chain to reopen in that city without significant changes in their corporate management philosophy. The reason this store hadn't succeeded there was simply a lack of caring about the community. They sent down merchandise that was an insult to their customers, and they installed a manager who lived outside the community.

The manager didn't participate in any of the local service clubs, give time to community activities, attend a local church, or put any of himself back into the community. He didn't even attend the local chamber of commerce meetings. He commuted down from the north and completely disappeared at closing.

Walk into any other store on that main street, and the manager knew you or at least understood you because you both were neighbors.

What the department store manager didn't care about, his employees could hardly be expected to. They rarely showed much interest in the custom¬er and could often be found hovering in a corner together talking about some personal event. Being from outside the community, and not participating in any of the community activities, the manag¬er didn't understand his customers and seemed to hire sales staff that didn't as well. Employees didn't appear to relate to the customer. There was one exception, one employee who cared and understood. She was now manager of a new clothing shop, which was doing very well in town.

The buyers up north were also out of touch with the customer, sending down merchandise that wouldn't sell in other stores on the assumption that small meant less discriminating. A manager involved in the community would have known his merchandise was wrong for his customers and would have done something about it.

Managers and buyers who do not care about their customers will not understand them and will get stuck with wrong merchandise. Worse than that, they will not have the right merchandise on hand and will force their customers to go elsewhere.

If this corporation hired a manager who cared about people and moved into the community; if this manager got involved in the community and hired staff that represented the community; if together the manager and the corporation made well-focused micro marketing buying decisions, then the chain would survive in this city. It could even survive in the face of the new Walmart going up fifty miles south, because the secret of co existing with the Walmarts and the Home Depots of this world is understanding where and how these mega stores with their mass merchandising are not meeting the needs of your neighbors in your community, and then supplying these needs faster, better, and easier than anyone else. The key is knowing your neighbor.

* * *
E. MICHAEL SHAYS CMC (ems@emsnetwork.com) is President of EMS Network, International, an association of senior consultants helping clients faced with conflict, transition, stagnation, and management dilemmas.

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