Along with the carpark test, a lack of customer service is one of the best indicators that a company has lost its way.
Unattended reception desks, closed cash registers and deserted delivery docks are reliable indicators management has focused on short term staff savings which will ultimately cost the business dearly.
Walmart is the latest example of this with Bloomberg Businessweek reporting that US shoppers are deserting the chain because shelves are empty and stores don’t have enough staff.
The claim stock is piling up out the back of stores is particularly concerning, the just in time inventory management of modern retail chains means there’s little room for error as outlets don’t have a lot of space whil the cash flow of the business and its suppliers is based on getting goods quickly into the hands of eager consumers.
Some of Walmart’s pain will be spread among suppliers as the store’s contracts will push undoubtedly some of the costs of rejected deliveries back onto logistics companies, effectively creating problems through the entire supply chain.
No doubt there’s plenty of angry suppliers and truck drivers who are grumbling about lost time and payments on Walmart contracts. That won’t be good news for the company’s buyers when contracts come up for negotiation.
Even though Walmart’s management can throw some of their problems over the fence, the fundamental issue of losing customers can’t be missed.
Walmart’s isn’t the only retailer who’s fallen for the short term fix of cutting store staff to give a quick profit boost as department stores and big box outlets around the world struggle with the damaging effects of not being able to serve customers.
That Walmart, one of the industry’s global leaders, would make such a mis-step shows the pressures on managements as economies deleverage and credit wary consumers decide that don’t need more junk in their homes.
Cutting costs isn’t going to address those bigger trends, it’s going to take original thinking and management commitment to adding real value to customers.
Service is just the start of a long process of refocusing the retail empires.
Image of Albany Walmart courtesy of UpstateNYer through Wikimedia