No Turn On Red

Here is one thing I believe in: customer service is not one way street.

Customers, as well as businesses they deal with, have an obligation to better customer service. Customer service cannot go from bad to good if the company doesn�t know that they are providing bad customer service. On the same hand, customer service cannot continue to be good or great if the company doesn�t know that they are already providing that level of service. It is important for the customer to communicate with whoever they are able to in order to help build good customer service relationships.

I�d like to share with you five ways that you, as a customer, can improve customer service in the places that you shop. Although the scope of this post is geared towards retail, restaurants, and industries where customer interaction is one-on-one, the basic tenets that I will describe can be applied to almost all of our business relationships.

Most of these ways should seem simplistic and obvious, but that’s the point. Talking to friends and family, it doesn’t seem that a lot of people are doing these incredibly simple and easy things that they can be doing to help businesses improve customer service.

For a little back story as to why I wrote this, check out my other post: On poor customer service and me being a poor customer.

Continue reading this entry

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Some time ago, my girlfriend and I ordered take out food from a national, fast-food restaurant. We drove there and picked up the food, but when we got it home we were not pleased with what we had gotten. When we opened the first food item, we noticed what appeared to be hair on it. I opened up the other item and the chicken, which was used in both dishes, just did not taste right. It may seem trivial now, but decided that we weren’t going to eat the meals we just bought.

I called the restaurant to let them know about the problem. I did this for two reasons. First, I felt as if they should know that there may be a potential problem with the chicken that we were served. My other goal was to see what they would offer me as a resolution to this problem. I was looking for an offer of a refund, but I also expected some sort of concern from their employee.

Instead, the girl who answered the phone acted completely disinterested in what I had to say, quickly rushed me off the phone and never offered me any sort of resolution. I expected she would offer me something - at the very least, I expected that she would offer to put me on the phone with the manager. But nothing.

Maybe I was naive to expect something, anything, but this phone called angered me more.

I took the food and went back to the eatery, where I went up to the counter and explained to the girl there (the same girl who answered the phone) that I was the person who called about the hair in the food and politely requested to speak the manager. The manager came over, spoke to me for a brief second, and then offered to make me new dishes (which I didn’t want) or offered to refund the money. She did this professionally, quickly and offered a great resolution to my problem.

I don’t believe I over-reacted at any point in this, nor do I believe I was unreasonable in expecting some sort of resolution. However, there is only one thing I didn’t do that I wish I had. I wish that I had taken five minutes to write to the parent company to explain to them what happened. I wish I had done this because the company should have known not only how I felt slighted by the girl on the phone, but the company also should have known how well I felt the manager handled the situation. It is a case of a negative experience becoming positive. At the end of all of it, I had a problem and it was resolved well - after a bump in the road.

If I had informed the parent company of what happened, maybe, in the future, the whole thing would have been handled better from the initial phone call. Perhaps the next customer that has a negative experience there isn’t as patient as me. They don’t bother to go back to the store and their story ends on a negative note, never going back to the store again after that phone call.

The reason I share this story now, long after the fact, is because I believe it illustrates some of the points that I touch on in my next post: Five ways you, as a customer, can improve customer service.

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The New York Times on the demise of the petite department in some department stores:

[...] the love affair with little women appears to be over. Three of the country’s most influential fashion emporiums — Neiman Marcus, Saks Fifth Avenue and Bloomingdale’s — have quietly eliminated or drastically scaled back their petite departments in the past several months, infuriating many longtime customers.

Given that manufacturers produce clothing in only a handful of standard sizes — among them, juniors, misses and plus size — the abandonment of petite sizes at the highest levels of American retailing represents a sea change in fashion, forcing some designers to either stop making special sizes for smaller women or re-evaluate how much to invest in the business.

More in today’s article, “Where’s the Petite Department? Going the Way of the Petticoat”

Is this a shift in trends or is this just a case of these three department stores missing the mark? As the Times points out, this may be a case of these stores missing the mark:

What did change is that petite departments gained a reputation for traditional — some would say frumpy — career-oriented clothing. Chic looks, clothing executives said, never made the leap from regular sizes to petite. So the very word petite became synonymous with many women who shopped there — working women over the age 50.

Over the past few years, other brands like JC Penney, Kohl’s, and Macy’s have upped the fashion offerings in their speciality size departments and have been met with positive trends. Walk into any of these stores today and you will see the traditional petite department, anchored by career-orientated clothing, alongside the more fashionable petite offerings. More so, these stores are also boosting their bottom line by offering this contemporary assortment under their private labels (see JC Penney’s a.n.a, Kohl’s apt. 9 & Sonoma, and Macy’s INC).

I don’t predict the downsizing of the petite department by Neiman Marcus, Sak’s and Bloomingdales is the beginning of a larger trend. JC Penney, Kohl’s, and Macy’s are still doing it right. Just because you are short, doesn’t mean you are also 50.

Besides, if a shorter woman can’t shop in your store - who’s to say she’s going to stick around to pick out clothes for her husband and her kids?

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The numbers from Abercrombie & Fitch: revenue up 20%, comp sales up 6% and net profit up 39%, beating Wall Street Estimates.

When digging into the numbers, some very interesting trends within the different brands: A&F comps were down 6%, abercrombie comps were up 30% and Hollister comps were up 13%. A&F menswear comps decreased by low single digits while womens apparel comp decrease was in the mid single digits. They didn’t talk specifics about RUEHL, except to say that it is performing well in comp and net sales perspective.

Some quick key points from the call that I found interested are that they seem to be that they are reducing the amount of promotional events, reducing the amount of clearance cycles, reducing floor space devoted to clearance, putting $50 million back into the stores in capital improvements this year. These are all geared towards improving the gross margin, which came in at an astounding 65.4%.

The thing that is amazing me about A&F is that they are able to get away with all of this. In such a tight retail market, they are now in their twentieth month of overall comp store gains (minus a slight hiccup this March). They have created the ultimate lifestyle destination brand and they are able to get away with charging top dollar for it. They have played with pricing, tweaking the price points at RUEHL and Hollister to be more competitive (they say they are pricing Hollister to be more competitive with American Eagle and they have brought the price points of RUEHL to an average of 12% more than A&F, down from the original 30% increase over the average A&F price point).

I do like their honesty when talking about the decline in A&F womens comps they said “I think we simply could have done better in that business. I don’t think that we flowed units and fashion as aggressively as we might have.” The decline, they say, is out of line with the womens business at the other brands. It’s good to see a retailer own up to a mistake like that and look for ways to improve.

Another good quarter for company as a whole. Going into the Back to School season, the company has some very impressive comp numbers to contend with (May, June, July & August of 2005 had comps of 29%, 38%, 22% and 24% companywide) which will make the numbers look flat or soft. Their challenge for the rest of 2006 is to improve upon inventory management and pricing to drive the gross margin. However, if Abercrombie & Fitch is able to reasonably build on these comp numbers, look for this to continue to be one of the hottest retailers going into the second half of the year.

More coverage of the Q1 results from Businessweek and Bizjournals.

Transcript of the conference call from Retail Stock Blog.

Full SEC form 8-k filing from Yahoo.

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After fantastic 2005, teen retailer American Eagle is off to a great start to 2006, continuing it’s upward trend, beating Wall Street estimates and putting up some solid numbers for Q1: net sales increase of 14%, comp sales up 9% and net profits up 16%.

CEO Jim O’Donnell attributes the success of the quarter to “successful merchandising and design, as well as the solid execution across our company.” Initiatives undertaken in 2005, such as the AE “All Access Pass” customer loyalty/reward program seem to be paying off in 2006 with AE President Susan McGalla saying that the “new enrollments are exceeding our expectations and the first two redemption periods were encouraging.”

As far as the merchandise itself, McGall goes on to say that for the Women’s end of the spectrum, “comps were best in graphic tees, tanks, shorts, capris, jeans, flip-flops and intimates, while women’s skirts, wovens and accessories were below our expectations.” Adding, “Men’s produced a positive low double digit comp with the strongest results in graphic tees, jeans, shorts, polos, flip-flops and boxers. Within men’s, we continued to see a planned downtrend in woven shirts.”

Accessories will be helped by the future launch of the AE sub-brand, aerie. aerie is the new intimates sub-brand from AE, with all stores having a full aerie store-in-a-store concept, launching in September. Results from the initial “bra test” in 100 stores have been encouraging, with a lot of positive feedback regarding merchandise assortment and trends in this area. McGalla says, “the number one bra that we thought was going to be number one wasn’t number one.”

As a male in his mid-twenties, I do not know much about an intimates department geared towards girls age 15-25. But I do know that AE seems to be swinging for the fences lately and I have no doubt that this launch will prove successful, turning into a gold mine for AE.

More about the aerie brand from this February article in WWD: American Eagle’s Strategy for ‘aerie’ intimates.

The other concept that they are excited about is the Martin + Osa store concept, debuting in four cities this Fall. CEO O’Donell describes it as “a unique, specialty lifestyle brand, targeting 25-40 year olds.” With merchandise that is geared towards an older demographic in style, design and price, I think that this store will wind up doing extremely well for AE. You have an entire generation of shoppers who are growing up and outgrowing AE, now get them to stick with you through the years. At the same time that AE is building/developing a lifestyle brand, they are also branding these customers for life. Smart move and I am excited to see this shop concept.

More information on the Martin + Osa concept from WWD, “Martin + Osa Mall Bound: Signs First Four Leases“.

The last area that AE repeatedly touched on is the improvement in sales in remodel stores. Remodel stores are gaining square footage through re-design and expansion, in some cases they are relocating within the same mall. In this area, AE did this remodel last year and the payoff is huge. The new store layout is larger, spacious, inviting, and fun to shop - it is a complete turnaround from the cramp quarters they once occupied.

To this regard, AE says that the average store profitability jumps 70% in the first year after remodel - 70% ! This is fantastic news for investors, as AE looks to remodel 68 stores this year alone. Retail Design Diva had a fantastic article on this a few months ago: You Know Improved Store Design Helps Increase Sales, But Would You Believe 46%? As the trend over the past few years was to reduce visual merchandising and the importance of store design, it is nice to see a company spend so aggressively in this area and be so vocal about their success. AE has even upped their 2006 capital improvement estimates from $175m to over $215m.

It is a good time to be American Eagle. They are poised for a very good year and will be a mall retailer to look out for going through the rest of 2006. Look for them to lead the way through the mall with their commitments to good design, value and aggressively seeking out opportunities to develop itself as a lifestyle brand.

More information on Q1 results here and here

Full transcript of the conference call here from Seeking Alpha.

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Target released their Q1 numbers, showing positive sales trend, positive comp store sales and a rise in net profit, but didn’t hit the marks set for them by Wall Street and their stock took a quick hit in an active day of trading.

The numbers: overall revenue up 12.1%, comp sales up 5.1% (compared to 6.2% Q1 LY), net profit up 12%, but selling, general and administrative expenses were up 15.3%. CFO Doug Scovanner said that the rise in expenses was due to the construction of three distribution centers and the rise in the number of stores they remodeled this quarter. He maintains that the yearly expenses for this capital improvement will be flat from last year, explaining: “As you know, as well, we remodel and expand a very substantial number of stores each year. We don’t even remotely try to time that by quarter for any particular purpose other than doing it when it makes the most sense. That drove a bit more expense in the quarter than we would expect for the balance of the year. That line item, per sae, should end up being flat year-over-year, but ended up putting some pressure on this quarter’s expenses.”

Scovanner talked about the positive response to the new apparel collections, including those by Luella Bartley and Tara Jarmon and growth in areas such as outdoor, electronics, and food. He also cites the growth in the average amount of items per transaction vs. the growth of the price per item.

Food seems to be an area in which they are making a bigger push. They are in the process of bringing all of their stores up to a newer food prototype layout, with about 650 of their 1418 stores having this new layout today, as many as 950 having an expanded food layout by year’s end and between 50 and 75 stores which will have an even larger food offering than the prototype.. Responding to a question, President Glegg Steinhafel said that although they do not have plans to offer fresh food (produce / meats) in the stores with the largest layouts, they will be focusing on offering a larger selection of their current assortment.

Steinhafel also commented on soft sales in home, the Global Bazaar shop concept from this past winter and tweaks that they are planning for the next year. They are looking to cut down the average unit price of the products in this area in order to spur more impulse buys, rather than having the customer wait for the items to go on sale.

To me, this last part actually makes a lot of sense. Target did get a lot of positive press for their global bazaar shop, but better merchandise mix between full scale furniture and smaller decorative/useful items will allow for more impulse buys, as they say. I will be very interested to see what tweaks they implement as the area was very beautiful, well designed, but didn’t seem to hit the pricing mark for a lot of their consumers.

Target posted very good numbers but Wall Street went into a little panic. Things wil llevel out and I think Targets yearly prospects look fantastic, as always.

Stephen Simpson at the Motley Fool feels that soon may a good time to buy TGT:

OK, so I’ve been positive on Big 2 discount retailer Target (NYSE: TGT) for a little while now and it’s gone all of nowhere. But the closer this one gets to its 52-week low, the more interested I get. I don’t often like to buy huge companies in highly competitive businesses, but at the right price I’ll consider just about anything.

…

I can understand the idea of staying away from Target because of overall fears about the health of the U.S. consumer. That’s not to say that I agree, but I at least can see the point there. In any case, these shares are getting more than a little interesting. A few more points on the downside and I just might add these to my own shopping cart.

More coverage from BusinessWeek.

Full transcript of the conference call here.

Full SEC form 8-k filing here, via Yahoo.

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Like Kohl’s, JC Penney also released some very solid numbers for the quarter: overall sales up 2.5%, comp store sales up 1.3% for the 12th consecutive quarter of positive same store sales, and profits up 22.1%. The company cites strong sales in fine jewelry, mens, childrens, and footwear while they say sales were soft in womens apparel, unlike rival Kohl’s.

According to president Ken Hicks on the conference call, “gross margin continues to benefit from the performance of our private brands, as well as continuing improvement in seasonal transition and merchandise flow.” This follows up his earlier remarks on womens apparel, when he said “In our women’s apparel business, we are taking aggressive action with markdowns to keep our inventory fresh, as well as building or key brands and adding new brands such as a.n.a. In addition, we continue to develop brands such as [E. Spiff], which we will introduce this fall in traditional careerwear.”

This call also gave us the first real look at the partnership between JC Penney and Sephora. Outlining the future rollout, Ken Hicks said “Beginning this fall, we will bring Sephora into a handful of JCPenney stores, and next year, our plans are to add Sephora, primarily in new stores, with some additional existing stores also having the concept. A more extensive Sephora rollout is planned for 2008.”

Walking into any JC Penney these days, one can see that there is opportunities to develop their womens apparel business further. Hicks blames this on general negative trends in fashion, (”.. the lack of really exciting things in fashion aren’t helping the business”) which completely suprises me. It’s clear that JC Penney may not be offering really exciting things in fashion, but don’t blame it on fashion in general.

Back to the numbers: direct sales via catalog were up 3.9%, but Internet sales were up over 22%. The modest gains in diret mail, which have been continuing to slip, lead me into the news that they have announced that they are de-emphasizing the catalog (via marketingblurb).

JC Penney is not suspending their print catalog, but at the annual ACCM Catalog Conference, a company official announced that the retail giant would focus on online rather than catalog sales. It seems that their online sales are growing at 23% per year, while print sales are at 10% growth and falling every year.

DMNews has more on the story. In fact, they are critical of the move, saying:

Former Lands’ End president/CEO Mindy Meads at the Philadelphia eTail 2005 conference cited a study claiming that customers who get catalogs generate a 15 percent increase in transactions and a 16 percent jump in overall spend.

Retailers like J.C. Penney don’t want to lose the chance to train the next generation of shoppers — kids watching Mom and Dad open the catalogs, then call in an order or go online. No catalog, no brand recall. Too much reliance on one channel of sales is not good, either. What if there is more stringent regulation down the road for e-mail and e-commerce?

Again, more here via DMNews.com

Like I’ve talked about before, JC Penney is at a stage where they can recapture what they are missing - through initiatives like the Sephora deal, building the private brands and even sponsoring the MTV Video Music Awards. As a consumer, I think their key to winning us back is through developing brands that we want to shop and making their buildings more exciting and fun to shop. I can’t tell you the last time I’ve gone into a JC Penny that hasn’t felt dated and stale.

JC Penney had a good quarter - higher profits on only slightly higher sales - and this could set them up for a very solid year.

More information via marketwatch.com’s coverage of the results. Retailstockblog has a complete transcript of the call, as well.

The full SEC form 8-k is here, via Yahoo.

Full transcript of the conference call from Seeking Alpha.

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The first batch of retail Q1 results are in and I’m going to start touching on some of them.

Kohl’s came out swinging with some extremely strong numbers for the quarter: 16% increase in sales, 6.9% increase in comp store sales, and quarterly profits up 34%. President Kevin Mansell says that there were strong sales in the contemporary and updated lifestyle classifications of women’s apparel, with strong response to the introduction of Chaps brand for Women, by Polo Ralph Lauren Corp, and the private AB Studio brand. Across the store, Chaps for Boys and Tony Hawk for Young Mens & Boys also saw positive response.

From marketwatch.com’s coverage of the conference call:

In response to an analyst’s question, Chairman and Chief Executive Larry Montgomery said Kohl’s has had only limited experience competing against a new, off-mall store format that J.C. Penney is beginning to roll out more rapidly this year. While Kohl’s stores have typically taken a short-term sales hit when a new Penney store opens nearby, they soon recover to normal levels, he said.

“I would suggest that probably when we open up, we probably hit them harder than when they open up,” Montgomery said.

Jeremy MacNealy at the motleyfool thinks very highly of Kohl’s stock right now, noting:

As a result of new brand and marketing initiatives to draw first-time customers to the stores, transactions for the quarter were up 4.8% compared to the same period a year ago. On top of this, transaction value rose 2.1% year over year, leading to overall comparable same-store growth of 6.9%.

He goes on to say:

Prospective investors will want to inspect the company’s free cash flow generation once the figures are made available in its 10-Q filing. But from just an earnings perspective, at roughly 18 times projected current-year earnings, this stock is reasonably priced, given the kind of growth rates we are currently witnessing. The market may be soaking sweat with concern, but Kohl’s shareholders have good reason to keep smiling.

More in his article, Kohl’s is Cruising.

Full SEC Form 8-k filing here, via Yahoo.

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Always low prices. Always. Woops.

From the New York Times:

With its white-apron-clad chefs, who whip up almond crusted flounder for $14.99 a pound, and its rows of hard to pronounce cheeses (consider bleu D’Auvergne, best paired with a Rhône red wine), Whole Foods Market has always felt like the Saks Fifth Avenue of supermarkets.

But the organic food emporium, all but synonymous with gastronomic indulgence, now wants to be known for something else: low prices.

Yes, low prices.

More here: Whole Foods Talks Dollars and Cents

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As a blog author, I am always trying to increase my readership. In our blogosphere, there are tons of articles and resources devoted to ways that blogs can increase readership. But Tom Evslin has put together an informative post over at the Fractals of Change, called “How Readers Find Blogs. This kind of covers the other side of the coin and shows how fickle statistics can be at times.

He sums everything up nicely at the end when he says:

Somewhere in all this may be the secret to blogging fame and fortune. But notice in the graph above how fleeting fame is.

Fame is fleeting, ain’t that the truth.

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