Sunday, 13 March 2016

Retail - expectations vs reality

To deliver excellent Customer Service in FMCG retail is hard. It is even harder than doing so in burger chains. You don't believe it? Go and try working in one instead of being a customer who just observe.

At the burger chains, the Counter Staff multi-tasking duty revolves around two things - cashiering and passing the correct prepared food to customers. If you go to the big shopping malls these days, you might have noticed that most of the fast-food chains are evolving their services. Mcdonald's and KFC starts to have separate cashiering and serving counters plus automated self-order kiosks, instead of the old school way of multi-tasking. I haven't been to Burger King frequent enough but I do know that the one at Kallang Wave Mall has the same layout with a digital Q number screen long before I see MCD's. It is also a form of optimising their 'production line' to speed up sales (many POS versus 1 service counter).

On the other hand, staff working at small retailers practically have to do EVERYTHING - what I call ultimate multi-tasking (in hokkien they say 'bao ga liao'). From cashiering, to merchandising, ordering, admin stuff, housekeeping, answering phone calls, and last but not least, serving the shoppers (I don't call all as customers as some are just browsing or have no buying intention). Again, this is a disadvantage compared to burger chains since ALL who are being served at the fast-food counters are customers not shoppers. Pretty much nothing more are to be expected besides getting the food which was ordered in a timely manner - then find the straw and stirer yourselves please. You don't see burger flippers doubling up as cashiers or cleaners, do you?

By the way, golden arches has one of the world best business system.

Then let us take a look at the big non-FMCG retailers. For them, I believe the 80/20 rule applies where 20% of customers who walked in contribute to 80% of their sales. This is because they are selling specialty or luxury products which not everybody can afford or need. Footfall generally is lower and market is more niche. When they charge premium price, of course they would need to dish out premium service. (Why do you think they hire so many sales persons standing around in suits?)

Now back to the big FMCG retailers. Imagine instead of looking into improvising merchandising, promotions or automating / streamlining processes to make work easier and more efficient for its workers, the almighty management puts its main focus on cutting manpower cost and telling store staff to improve on their customer service (by their own motivation). Then they wonder why sales went down although cost-savings went up. Management expectations versus reality check?



As each of the retailer are retailing different products, we can't expect them to all function like the burger chains. Each have their own unique and possibly advantages business models.

Amongst the various retail companies that are listed out there, which would you invest in? Why would you say so?

(I shall not bother with small non-FMCG retailers as I have not spotted any with substantial profitability.)

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