We all know the retail adage about the customer always being right. But meeting customer expectations requires a certain amount of guesswork: You can only cater to their demands if you can predict beforehand what those needs might be.
In the case of electronics giants Best Buy (Stock Quote: BBY)
Do you understand your clients well enough to keep them from the competition?
No matter what you're selling, it's not the greatest time to be a retailer. Electronics have weathered the downtown reasonably well, thanks to steady demand for video-game systems such as Nintendo's
Still, analysts are carefully watching electronics chains Best Buy and Circuit City as bellwethers for consumer spending, especially leading up to the crucial holiday shopping season.
For now, Best Buy appears to be winning this particular race. Circuit City this week announced it would be closing 155 stores in the U.S. and cutting its workforce by almost 20%. With the company talking openly about restructuring, it may even consider filing for bankruptcy in the coming months.While Best Buy has pulled back its growth strategy in response to the current economy, it's faring well compared to its main rival. So how did Best Buy set itself apart? And how can your small business do the same?
"The major difference is execution," says Tiffany Co, a retail analyst at Fitch Ratings. "They developed and implemented a customer centricity program, and they executed it really well in the past couple of years. That's helped widen the gap between the two companies."
Both companies have deep roots in the electronics business; Circuit City began as Ward's, a Virginia television store that opened in 1949, while Best Buy was founded in 1966. But as computers and cell phones grew steadily more complicated, Best Buy was the first to realize that shoppers didn't just want the latest technology -- they needed help using what they bought.