The changing fortunes of two computer equipment and service stores in New Jersey points up the importance of customer service when David meets Goliath in business.
At a time when retail giant CompUSA is closing 10 of its 11 stores in the Garden State, Micro Center, a small computer chain with a big reputation for service and expertise is opening its 20th nationwide location.
The Ohio-based Micro Center chain plans to open its 20th store in April in a new retail development that can draw customers from a wide area. The 35,000-square-foot store, located in an enterprise zone, will sell video game consoles, HDTVs and cellphones, as well as esoteric computer parts for cyber-geeks who like to "build their own." Exactly the same audience CompUSA was created to serve. The store is within 10 miles of two such giant stores about to close.
Retailing experts point to Micro Center's reputation for having knowledgeable sales staff trained to help as a key component of the companys growth. These same experts report that CompUSA has, in recent years, failed to build customer loyalty with service. The result is declining sales in the bigger chain while Micro Center is gaining a reputation for quality service coupled with more complete product offerings.
In addition, other experts see a change in the way Americans view the utility of so call warehouse-style big-box stores. Many of these locations are lightly manned and have few sales staff members who can advise customers.
Marketing experts say they are detecting a need, not only in product but also advice and suggestions from sales staff. This need appears to growing and is necessary to supplement the information provided by the Internet, particularly at the time of sale.
Certainly we are not seeing the end of the big box, no-frills store, said Dr. Kenneth E. Lehrer, a Houston, TX, economist. What we are seeing is a continuing need for the smaller enterprise with specific expertise to serve a consumer and industrial sector that wants information the old fashion way, at the point of sale.
While computers have become ubiquitous and available just about everywhere, the need for knowledgeable sales staff has not abated. At the same time, Micro Center also brags that its stores carry a larger selection than the biggest of the big boxes.
Customer service and skilled salespeople are the chain's claims to fame, and the secrets, it says, to annual sales estimated at more than $1 billion by Forbes magazine, which puts it at 307th on its list of the Top 500 Private Companies.
The 19 other stores in the chain average $55 million each in revenue.
"Micro Center modeled itself after high-satisfaction department stores like Nordstrom, where customer satisfaction is very important," Marketing Communications Manager Ed Lukens said. "What we try to do with the salespeople is to get people who are really geeks with good people skills."
Micro Center was the only computer retail chain to be recommended for both service and selection three years in a row by Consumer Reports magazine. A survey by the magazine last November gave the chain the second-highest customer satisfaction score, after Apple stores.
"They're a lot different than CompUSA. This is a different animal," said Doug Olenick, an editor at TWICE, a leading consumer electronics trade publication.
"Their salespeople, compared to others in the industry, are extremely well-trained. When you walk into their store, someone will walk up to you and offer to help, and be adept at doing so."
The first Micro Center store opened 28 years ago in a vacated department store in a suburb of Columbus, Ohio, near Ohio State University and the scientific think-tank Battelle Memorial Institute. Those two institutions drew potential customers to the store and made it easy to find computer-literate salespeople.
The privately held chain has expanded at a glacial pace compared with other retailers.
It waited until 1988 to open its second store, and has added just 17 stores since then. In contrast, CompUSA is five years younger than Micro Center, but had more than 200 stores a decade after opening its first.
"Because they're so few and far between, most people don't know about them," Olenick said.
The chain, he said, doesn't cluster stores near each other, so it is unlikely they would open other stores in North Jersey any time soon.
"They consider themselves a destination," he said. "They think a person will drive miles to get to their stores."
New Micro Center stores "tend to do well," Olenick said. "They do a lot of research prior to selecting a location. You don't hear of their stores closing."
The Paterson store, at 263 McLean Blvd., is in the new Route 20 Retail Center, developed by Rushton Industries of Fairfield.
The center includes a 167,000-square-foot Lowe's hardware store and a 20,000-square-foot Pep Boys store.
Rushton Vice President Rick Rushton said company executives have visited Micro Center stores in other parts of the country and they believe the store will draw eager customers. "It's really a great store," he said. "And the people who work there are really knowledgeable."
Another advantage for Micro Center and one that other smaller enterprises should consider is locating in so-called urban enterprise zones. In New Jersey, stores located in such zones get a 50% sales tax reduction from the state.