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Google Can Handle Data, But Can It Handle Actual Shoppers?

This article is more than 9 years old.

Google is set to open up its first retail location in New York City's SoHo neighborhood, according to news reports earlier this month. Specifically, Google has signed a lease for 8,000-square feet at 131 Greene St., which at current market rents for the submarket represent a sizeable investment for just about any company except Google.

Rent aside, the stakes are still huge for Google, assuming the report—and it is hardly the first--is true. Google has, one could conclude, been practicing for this day with various endeavors such as the floating barge showroom, its Winter Wonderlab pop up stores in certain cities and, of course, its Chrome Zone sites in select Best Buys.

But those have all been partial attempts at a retail presence, with the emphasis on technology and gadgets.

With a full-fledged retail presence, Google is going to have to, well, actually sell. This may not seem like a tall order for a company that probably knows more about our tastes, secret fears and wish lists than our parents or spouse, but it is. That is because in the brick-and-mortar world of retailing, selling also includes customer service and after service.

Competing Against Apple

If that weren't enough, anything Google does in this area will be benchmarked against Apple. Like SoHo retail rents, this would be a daunting--make that terrifying--prospect to anyone but a company with Google's resources.

Asymo, which tracks Apple retail performance, noted last October that in fiscal 2013 there were 395 million visits to Apple retail stores. In 2012 there were 372 million—a difference that is "approximately the population of Australia."

More recent figures from Apple suggest a drop off in sales, although when Angela Ahrendts joins Apple as head of retail operations in the spring that is expected to change.

There was also that buzz last year that customer satisfaction at Apple's retail outlets dropped when the company reportedly directed its sales staff and reps at the Genius Bar to focus more on sales than customer service. But slipping service standards or not, Apple has a rep for stellar customer service and it will benefit from this halo effect for some time.

Google's Strengths

Google, meanwhile, has a rep as well, several in fact that range across the board, all depending on the product or service in question. The company, in short, may have built itself an excellent brand for search technology, for Android and for outré tech like driverless cars, but its customer service brand has been more a matter of happenstance than any kind of concerted effort.

In one case Google's reputation actually prompted a CEO to make clarification and a promise about its services as it is acquired by Google. Shortly after Google announced its $3.2 billion acquisition of Nest—the smart home monitoring device company that make products one can't help but note are crying out to be sold in a retail environment—Nest's CEO Tony Fadell felt obliged to make clear something to its users: any changes to Nest's privacy policy will be opt-in. Also, the company will be "transparent" about those changes to its users, he said.

But while Google clearly has its own set of challenges with its retail endeavor it also has the bandwidth to turn these into an advantage—if that is, it is willing to swap its focus on customer data gathering to customer service.

If any gadget will be sold in a retail Google store it will be Nest, along with, of course Google Glass and Nexus and its partner gadgets.

Now service was not an issue that Nest and Google have not specifically raised but Dan Pallotta, writing at the Harvard Business Review Blog Network did. Pallotta wrote that he used Nest products and installing them required a service professional. Basically Nest doesn’t have that great of a service culture, he wrote. "Tech support is really important for this product, which is complicated to install, set up, and maintain," he writes.

Nor is Google, he concludes, up to the task. "Google’s disinterest in customers could make Nest’s subpar tech service even worse," as he writes.

But imagine the possibilities if Google managed to turn that around? Google knows how to study people; it has been experimenting on its search engine users around the world for decades. Maybe Googlers don't realize from their own personal experience that connecting smart hardware can be frustrating for the masses, but it has the capabilities to identify that as an issue and address it—in, say, a retail environment as a competitive differentiator.

It does it internally, after all.  According to a profile about Google's human resource department in Slate last year:

Google’s HR department functions more like a rigorous science lab than the pesky hall monitor most of us picture when we think of HR. At the heart of POPS is a sophisticated employee-data tracking program, an effort to gain empirical certainty about every aspect of Google’s workers’ lives—not just the right level of pay and benefits but also such trivial-sounding details as the optimal size and shape of the cafeteria tables and the length of the lunch lines.

So it's all the more confounding when Google doesn’t get even the basics about shoppers' wants and needs, be it service for a confusing set up or something as fundamental as the right-sized paper bag for groceries.

Grocery delivery is another fledging retail endeavor by Google.  Reuters reports that the service, Google's Shopping Express, is getting ready to expand in more cities, including New York, in short order.

A year ago as it was just launching the service it raised eyebrows among customers who placed orders for one or two items and received them in a large bag better suited for a week's worth of groceries. Reuters called it a "rookie mistake" that "underscores how Google is wading into unfamiliar territory." Reuters, of course, is talking about the grocery delivery service, but it could just as well be referring to Google's approach to retail customer service overall.