Retail business is a fast pace, game changing, competition reacting world. One late move and you are behind, and also on the other end, one bold move and you are ahead of the pack. It follows trends and it follows market tendencies. For retail business strategic sourcing, contracting and procurement are very important because it can be a significant source of improvement that will not only affect the bottom line through direct savings, but also, can give that edge by innovations to move ahead of the pack. By working close with suppliers one can get that latest, new “something” to become leader in their retail front.
The positive side of retail procurement is that direct effect on the business itself, but it has a negative twin brother too. Many retail business, if not all, rely on the customer experience. A happy customer who had a positive experience buying and using a product or service will come back again and again, and, will tell friends and relatives to consider spending on that brand. The wrong side of strategic sourcing and procurement on retail business is when you start to sacrifice the customer experience for savings.
I recently visited Las Vegas, Nevada for a convention on e-sourcing. The event received three thousand colleagues from all over US and some Latin American delegates too. For me it meant to take two, three hour flights to get there. My first flight was delayed one hour leaving me just a few minutes to connect in Houston. I had to run through customs and run to just make my connection. On my way back there were so many flights from Las Vegas to Houston that, very often at least one of them gets cancelled and if you are one of the unlucky passengers to be on that flight, you have to find a way to get in another one. Mine was on ok, but some others colleagues had to reschedule.
Besides the flight changes and delays which already affect the experience, other things may me reflect on how savings initiatives on the flight I was on, really affected in a very negative way the customer experience. For starters the flights where scheduled on noon so for sure if I get into a flight at 11:50am for three hours I will be needing food. The airlines offers food for purchase. What? Ok just add seven bucks on a 900 dollar flight and give me food. Don´t go asking for more money while I´m sitting in the plane. That just does not make sense. Food on air is like pedals to a bicycle. Virgin Atlantic got where it is by improving the experience not diluting it. I can see right through the idea to charge for food as a poor excuse for another revenue avenue. Saving peanuts literally!
Food might not be a savings initiative for airlines but to my experience also entertainment got the same treatment. Now here is where I, as a customer see a poor excuse to give an experience. On the flight I was the offer direct TV. Wow really! bunch of channels, lots of content, directly received on the air live. News, sports, pretty cool. The only bummer is that you have to swipe your credit card and get this wonderful service spending some 5 to 7 dollars. Don´t sound like much so why don´t just do it right? Well why don´t just give it as part of your customer experience? I can see how that negotiation went down without the customer in mind. There are other places in the operation to save some money and not affect the customer. If you did not swipe your card you were left with a two commercials that ran the whole three hours back to back. Actually if you pulled out your device like a tablet, phone or computer and entertained yourself, the screen in your face was pretty annoying. But the way must of the customers did not hire the service.
The last part that really affected my total of four, three hour flight within the span of four days was the leg room. It seems that all airliners sell you with more leg room but in my case it was not entirely true. Yes leg room because the seat in front of me had space between the seating and the floor but the recliner was in my face. The space between rows was the smallest I have experienced in a long time. Another bad attempt in saving a few bucks by adding an extra row or two to the plane and cramping the passengers.
To finish off on the poor ideas on airliner savings was the baggage allowance. Nowadays only one piece of luggage is allowed without charge and one personal item and one carry on. Wow have you seen the size of the carry on people try to stuff in the overhead compartments! I mean if we go down we are getting killed with this lumps of baggage on our heads! Most people are not even fit to load them in the overhead bin! So why do airlines provoke this. To my very own personal appreciation is another poor attempt to save some money by affecting the customer experience, charging for that second piece of luggage.
I bet that a value improvement on maintenance contracts or airport fees of 3% or even less can make up for the little savings that can be perceived by charging for food, charging for entertainment, adding one or two rows of seats and charging for the second piece of luggage all combined. At the end the experience is destroyed, the savings are not at all worth it and Airlines still go bankrupt by not focusing on what really matters: Efficiency and Customer Experience.