business news in context, analysis with attitude

On the subject of Toys R Us’s bankruptcy, MNB reader Tom Murphy wrote:

This appears to be another case of a private equity group with little knowledge of the business models, customer expectations and the intricacies of retail driving a retailer into the ground my syphoning off cash, cutting talent to save a buck, and generally trying to turn a fast buck.  There are some exceptions, e.g., Cerberus has done a reasonable job…but they were made up primarily of ex-retailers.  Generally, private equity and retail don’t mix.

And, about Best Buy’s apparent strides, MNB reader Richard Townsend wrote:

Just wanted to give you my take on why they may be competing effectively against Amazon.  I understand, though personal research mostly, that many manufactures cater to retailers by designing similar models with different features to meet certain price point requirements by the retailer.  I know Walmart does this as I suspect Best Buy, Target and others do it, too.  One of the things that Amazon, and other online sights, even Best Buy, fail to do effectively is properly illustrate their products and features so that a consumer can make an intelligent choice.  I find it very difficult to compare similar products across the internet, when various sights do not include all the necessary information about their products.

I think that one of the reasons Best Buy has remained relevant, and other box retailers, is that a person can physically inspect what it is that they are buying and make a better decision on what is relevant to the purchaser.  When you consider the cost of these products, TV's that cost thousands of dollars, even mobile phones, these chain stores, I think, still hold the edge by allowing customers to inspect and compare.  I think Best Buy may have just been the first to understand how to make it all work better.

Along the same lines, from another reader:

I’ve been thinking a lot about the future of physical retail, particularly now that I’m back in the grocery space.
As I tweeted yesterday, “Toys'R'Us provides no compelling reason to buy from them versus Walmart or Amazon. Dirty stores, underpaid staff, high prices. So long.” Contrast that with Best Buy – a store that recognizes the singular importance of physical experience in an increasingly online world. In another set of Tweets yesterday: “I'd like to offer one more reason bricks and mortar retail is sucking wind. The benefit of a physical location is the experience: the ability to touch a product, have an expert walk you through the benefits, and concretely imagine the purchase in your home and life. But this is impossible to do in a world where floor employees are paid poorly, for part-time work, with few benefits, and no expectation of hours. Why should a customer want to visit your store when your associates hate working at your store? Until retailers fix this they have no advantage over Amazon or Walmart.”
Back in grocery world – the importance of experience has always been what distinguished the best performing supermarkets. Costco (and Price Club) understood the treasure hunt and the feeling of belonging to something exclusive. Whole Foods, Wegmans and Mariano’s had their acres of specialty prepared foods. Stew Leonard’s is…something totally else. And even hard discounters like Aldi can make saving money feel pleasantly real (“I’m keeping prices low by bringing my own bags”). But one reason that supermarkets are able to execute on these great experiences is the fact that they’re almost uniformly great employers. If you work hard you can make a living wage, without finishing high school. And store managers and assistant store managers are well paid and often lack a college education. And you don’t just see this in the premium chains: chat with an associate at a mid-tier Hannaford or Cub and you’ll find someone who’s helpful, knowledgeable, and professional.

Regarding the story about Trader Joe’s being a great place to work, one MNB reader wrote:

I, too, work at Trader Joe's as a PT job on the weekends. The article is completely accurate. I have been with TJ's since the beginning of July, and it is, honestly, an amazing place to work. The business and management model is amazingly efficient and is described as an "inverted pyramid" model. Our store has two captains and nine mates. I always enjoy going to work because it truly is a team effort, all day, every day. It makes me want to give 110% every time I clock in, knowing that everyone else will too.

As a crew, we have daily goals to "Learn Something New" about a crew member, or "Make a Customer's Day!". As a crew member, we have the authority to open up a package and sample it if someone is unsure about it, hoping they will buy it if they like it, or save some money if they don't!  We can give a free bouquet of flowers to someone who, after engaging with at the register, we find is having a hard day. We are encouraged to engage with and learn about our customer base. What they like and dislike. For instance, near our store is a very large population of Jewish people. We have the ability to showcase and adjust our store merchandising to highlight items they may need during Rosh Hashanah. They love it! 

The bottom line: Best place I have ever worked. Best shopping experience ever (just ask my kids!). Most efficient and effective grocery operation I have ever been a part of. Most open, trust-worthy management team I have every worked for. What more could you want in a career?

KC's View: