Small Business & Startups

This Graph May Help To Explain Why Dick Smith Went Belly Up

Yesterday, Dick Smith’s receivers announced that all 363 stores across Australia and New Zealand will be closing down over the next eight weeks. It was a sad and ignoble end to one of Australia’s most beloved tech retailers…Except it wasn’t actually that beloved at all. As this graph from Roy Morgan Research points out, customer satisfaction with the franchise was significantly lower than any of its competitors and had been spiraling downward for years.

The above chart looks at how the major players in the electronics retail space have fared with customers over the past five years. Roy Morgan found that customer satisfaction and store attendance both dropped at Dick Smith between 2011 and 2015.

Dick Smith wasn’t the only retailer to shed customers over the last few years — we can thank online shopping for that — but all of its competitors managed to raise satisfaction levels over the same time period. Betta Electrical was particularly successful, jumping from 83 per cent to 93 per cent.

It’s rather telling that Dick Smith’s customer satisfaction rating was the lowest of all the retailers in Roy Morgan’s report. In the words of Roy Morgan Research CEO Michele Levine:

“While our data cannot shed any light on the company’s business practices, their consequences can certainly be seen in Dick Smith’s below-average customer satisfaction rating and shrinking customer base.
“Many businesses operating in this field could learn a lesson or two from Dick Smith’s downfall, starting with the importance of always ensuring the customer is happy.”

As the next lowest performing retailer in Roy Morgan’s poll, Harvey Norman may want to sink some money into improving its customer-facing operations and retraining staff. Dick Smith was the first to go, but we have a feeling it won’t be the last.

[Via Roy Morgan]

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