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Message for electronics retailers: Customer service sells
For all that they have in common, major electronics retailers such as Best Buy, Circuit City, Wal-Mart and Target differ in one important - even critical - way. Circuit City, in particular, has cut customer service in order to cut costs, and it has seen sales dive. Best Buy has amped up its customer service, and the chain is flourishing.
Three of the TVs are dark in Wal-Mart's electronics department, where the only two clerks in sight stock a shelf and disappear. At a nearby Target, the digital camera desk is unmanned, and there's no staff roaming electronics. In Circuit City, a clerk concedes it's his first day on the job and first week in the country.
But over at Best Buy, three clerks staff the "Geek Squad" counter, and another hovers nearby, poised for questions, which he handles with ease.
A recent shopping trip with a sales training expert underscored the state of competition and service in retail electronics. Business at Best Buy, even in a weak economy, is thriving, thanks, experts say, to its emphasis on service. By contrast, its once-mighty rival Circuit City has fallen far, brought down by a reputation for lax customer service and aggressive competition from Best Buy, as well as mass merchants such as Wal-Mart and Target, online sites and office stores, including Staples.
"Across many industries, we've seen that the retailers that grow customer service ratings the fastest have greater sales growth," says Chris Denove of J.D. Power and Associates. "Prices have come down dramatically on electronics items, and at the same time, the complexity of the products has increased. Expert advice is more important than ever."
Circuit City's struggles could serve as a case study in the critical role of customer service in the retail industry, especially electronics. Last year, Circuit City laid off thousands of its best-paid and most knowledgeable sales staffers, only to see many of them snatched up by Best Buy. Since March, Circuit City's answer to Best Buy's popular Geek Squad tech-help team - called Firedog - has laid off up to 200 people. And its cable TV-installation unit has shut down.
