The HUB: Exchange of Ideas.

Supermarket Sweep

How is it that an entire industry could take something that people inherently love and turn it into something they barely tolerate? That’s what’s been going on in the grocery industry for the past 50 years. People love to shop and yet don’t love to shop for groceries.

What’s to love? Most of the stores are messy, the help is surly and the selection is at once lacking, overwhelming and worst of all, predictable. Looking in from the outside, grocery appears to be the craziest business on earth. Shoppers would love nothing more than to love to shop for groceries. And the thing is, it would not be all that difficult to make grocery stores more lovable. Better lighting. Faster checkouts. Clerks who smile.

It’s not as though grocers would have to blow themselves up or try to replicate Stew Leonard’s or Wegman’s (although that would be nice). In fact, their model could be as simple as that of Amelia’s Grocery Outlet. Amelia’s is a so-called “salvage grocer” that trades in goods that are either damaged, discontinued or past their sell-by dates.

Don’t laugh — Amelia’s same-store sales were up 12 percent last year, about twice the rate of Kroger. The reason isn’t just the low prices. What shoppers say they love about Amelia’s is that you just never know what you’re going to find there. When you get down to it, isn’t that what we love most about shopping? So, surprise us. Pleasantly. Show us you understand who we are, what we want and what we need. We could learn to love grocery shopping yet.

Tim Manners, Editor-in-Chief

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Amazon Obsession

Jeff Bezos attributes Amazon’s success to its obsession with customer service. “We are not great advertisers,” says Jeff. “So we start with customers, figure out what they want, and figure out how to get it to them.”

This means spending “huge sums of money on such ‘frills’ as free shipping” which drives down operating margins and alarms Wall Street — where investors see investments in customer service as tantamount to “giving away money that should have gone to the bottom line.”

But Jeff thinks it’s key to the kind of customer experience that leads to enduring customer loyalty — and to something like 35% growth in 2007, not to mention margins now up to around six percent.

In addition, Amazon today “says it has somewhere on the order of 27 million active customers, who, in the last quarter, were spending an average of $184 a year on the site ... up from $150 or so the year before.”

But it’s not just because of free shipping. According to Forrester, “52 percent of people who shop online say they do their product research on Amazon.”

Indeed, “millions of people instinctively go to Amazon when they want to buy something online because they have come to trust the company in a way they trust few other online entities.”

[Source : Joe Nocera, The New York Times, 1/14/08]

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