Back in April, Best Buy (BBY) sued electronics chain Ultimate Electronics for claims that it compares prices every day to beat those of its rivals. Maybe it's because since the demise of Circuit City Best Buy has had a pretty clear field when it came to national consumer electronics chains.
However, the Colorado-based Ultimate, still intent on promoting comparative price setting, has stepped up the heat. Not only has it begun to expand east, according to someone I spoke with at a new store in Massachusetts, but a quick look about the place gives some clues as to how the company plans to differentiate itself, with a focus on institutional and methodical customer service that could possibly challenge the consumer responsiveness of Best Buy, Target (TGT), and Walmart (WMT).
When I visited the Ultimate Electronics in Holyoke, MA, a few things struck me. One was the size and density of display. The store had more room and fewer products than you'd find in most chains, particularly those emphasizing discounted pricing. Success generally comes from increasing the dollars per square foot of display space.
There is an unusual mix of products. For example, there were the consumer electronic products you'd expect, but also a large selection of appliances (something that Best Buy has seemed to deemphasize in many of its stores) and even pool tables. In addition, there was some furniture, all in displays intended to create a home setting for a game console, television, or sound system. Although Best Buy makes some use of such settings, Ultimate seems to put an emphasis on creating an environment, and then making everything -- equipment and furniture -- available for purchase.
Most conspicuous, though, was the attempt to push attention to the customer. The store seemed to have a larger amount of staff than might be expected given the number of shoppers, which seemed low. But if you watch the display monitors scattered about the store and placed for employee use, you notice an interesting set of screen savers: rules of customer service, ending with a collection of all ten rules:
That is where Best Buy, Target, and Walmart are most vulnerable. Relatively few people are truly comfortable shopping for technology. Being quick to greet and help customers, asking questions, and ready to literally go to someone's house if necessary, I think the chain has the chance to make itself a preferred destination for a large portion of the public.
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