Tags: Decline | Fall | Service | Empire

The Decline and Fall of America’s Service Empire

Tuesday, 20 Dec 2011 08:48 AM

By Andrew Packer

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“I’m sorry, I can’t help you.”

We’ve all heard those words at one point or another.

The most recent for me was last week, dealing with a delayed flight that nearly meant an overnight delay. Why the delay? Nobody knew.

Only one thing saved me from spending a night at the airport: The fact that the connecting flight was delayed too. Not everyone from my first flight was so lucky in making their connections.

It’s tough to express your displeasure when the low-level employees dealing with your problem don’t even fully understand what’s going on.

It’s not just limited to the airline industry either.

We all know the startling statistic that consumer spending is responsible for about 70 percent of America’s GDP. We’re a nation of consumers.

Americans have run up trillions in credit card balances to buy more and more stuff.

The problem with being a service-oriented economy, however, isn’t that people might spend less when the economy goes sour. The problem is that, when it comes to service, we really don’t know what we’re doing. As long as people come into a store, make purchases, and don’t have any questions it’s not a problem. But life isn’t that simple.

This trend has been a long time coming. Skilled and knowledgeable employees have been replaced with lower-earning staff members who are simply needed to man cash registers.

Not that long ago, you could go to Home Depot and find it staffed with former employees from smaller hardware store chains who could answer a wide variety of questions for your hardware needs. You could go into a computer store (now they’re all lumped in with electronics in general) and get all your questions answered about which models were good and which weren’t.

Now such specialists are a dying breed with only a few, if any, per store, backed by an army of cashiers. If you want to learn about a product, it means you have to do your own research first. As long as you’re online, though, you can usually find the best prices and have items shipped straight to your home.

Knowledgeable employees aren’t the only ones getting outsourced. The trend of hiring warm bodies to man cashiers is on the decline too. The rise of “self-checkout” kiosks reinforces this disturbing trend. Naturally, these kiosks have a few bugs to work out, so even though there may be four of them running, it requires someone there full-time to make overrides. One cashier, four lines.

Ironically, the decline of service quality is usually beneficial to the bottom line of most companies. Retail is an industry with relatively low barriers to entry. There are no government regulations limiting the number of retailers. Capital requirements are almost zero, compared to the large expenses needed to get a factory up and running. That’s great for innovation, but usually bad for retailers as it keeps driving margins lower.

American’s service empire is crumbling, a victim of its own success.

Watch out for long lines and poor service this holiday season… and beyond.

© 2014 Moneynews. All rights reserved.

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