What Happens When Retailers Prioritize Lean Over the Customer?

I recently had a telling experience with a retailer that I've developed quite a bit of respect for over the years, Crate and Barrel. For those who do not know the store, it offers higher-end kitchen products and furniture at prices that are often quite reasonable. We've gotten to appreciate the quality of some of the higher end products over the years, including a sofa which they private label from American Leather (a very high end manufacturer) and sell for less than the wholesale cost that the manufacturer charges typical retailers. True, they also have a lot of low-end junk as well -- how many margarita glasses do you really need -- but in general, if you know what to look for, Crate and Barrel has some screaming bargains relative to their competition.

And I've also come to appreciate them from a systems (both e-commerce and store) customer service standpoint. That was, until last week. At the time, my wife had picked out a carpet sample from their local furniture store and brought it home to test it out. She checked with the sales clerk whether or not the rug we were interested in was in fact available for shipment in a reasonable time frame. They answered that it was in the local distribution facility and they could have it to us shortly. But when we returned the sample the next day and asked to order the rug, we were told it was on back order until July. Now, if you've met my wife, to say she was understanding would be to exaggerate by an order of magnitude, given that she had spent the better part of the day buying other pieces to complement the rug that she thought we'd soon have. Here is a vendor that between our personal account and our companies, we've spent well over 5K at in the past year. And to be told an item was available when it really was on backorder is unacceptable.

But what made us angry was going online and trying to order the same carpet to see if it was available. It turned out that if we typed in our zip code, it was not. But if we typed in a zipcode on the East Coast, it was available for immediate delivery. I called Crate and Barrel's regular toll free number to find out why and was told they had three distribution centers and could not ship in between them (even for loyal, high-spending customers). The phone rep politely suggested that I call customer service if I had an issue with the policy to see if they could do anything about it.

The next day, I did call, and gave the friendly representative a mouthful. How could they deny shipping a product that was clearly in the United States to a customer who was told it was available? The representative agreed after escalating the issue and was able to expedite the order, getting it from a different center. Clearly, what happened is that in an attempt to eliminate inventory and waste -- and added shipping costs -- from their system by having their distribution centers operate autonomously Crate and Barrel had in fact created a customer service nightmare for any customer willing to type in different zip-codes to see if the item was available somewhere else in the country. What Crate and Barrel should have done is create a system that segments customers based on spend and loyalty and makes sure that an item is available -- provided it is in the country -- for immediate shipment, regardless of distribution center location. Fortunately, we're now looking forward to getting our rug in the coming weeks. And the politeness and professionalism of the Crate and Barrel staff -- not to mention the style and quality of the products for the money -- has kept us as loyal customers. But perhaps they should have engineered a different fulfillment and warehousing approach that put the customer first from the start.

- Jason Busch

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