Retailers losing out to hidden 'soft costs' as staff plug the gap left by 'no frills' IT warranties

This article is brought to you by Retail Technology Review: Retailers losing out to hidden 'soft costs' as staff plug the gap left by 'no frills' IT warranties.

Retailers opting for basic warranties for their IT equipment are losing money through hidden 'soft costs' associated with standard 'Back Door Fix' services, leading to further delays, poor staff time utilisation and lost sales, warn experts at Barron McCann.

It is very common for retailers to be offered warranties on IT equipment at the time of purchase and in many cases, extended warranties can be so cheap that the decision is a simple one for the purchasing department in charge of the purse strings. However, the majority of these 'no frills' warranties don't specify exactly what is included and in many cases, retailers only find out their cover is inadequate when they experience a problem.

Most basic warranties only honour a standard 5 day, 9-5 delivery time, meaning that evening and weekend faults could see several days pass before a replacement part arrives. With extended opening hours increasingly becoming the norm and figures suggesting that PoS downtime alone costs retailers an average of £3,700 per minute(1), this is a delay that many retailers simply can't afford. Yet due to the hidden nature of the 'soft costs' associated with this process, mainly from in-store staff having to take on additional tasks such as logging the fault, reorganising staff and systems to work around the fault, whilst also maintaining the customer experience, many retailers are unware just how much these 'cheap' warranties are actually costing them.

Sean Chandiram, Sales & Marketing Director at Barron McCann, said: "Often the hard cost of the warranty service is so attractive that retailers sign up without a second thought, but the nature of retailing demands a break-fix service goes further than the 9-5 Monday to Friday store hours. With evenings, weekends and 24-hour stores, retailers ideally need to be receiving the part the same day and by someone with the expertise to fit the part properly, to ensure minimal downtime.

Sean argues that the problem often arises because the warranty deal is approved by the retailer's purchasing department, but it is the operations department and the Service Delivery Manager who fully understand the type of maintenance service they need and end up having to deal with the fallout when the pre-arranged warranty doesn't deliver.

"Many retailers would be surprised if they worked out the true cost of replacing a spare part delivered via a basic warranty service when compared to a separate arrangement with a third party IT support provider, which would be tailored exactly to their needs, include delivery times of as little as 4 hours, a fully experienced engineer on site to replace the part as well as handle any secondary faults. More importantly, it would enable store staff to remain focused on their core tasks and on delivering an exceptional service to their customers.

"Retailers should be actively searching for a service that meets the needs of their business and of their customers. To get the best value for money, they actually need to tell the manufacturers they want to purchase hardware without warranty, and then arrange a contract with a specialist service provider instead. This thinking goes against what is considered the 'industry norm' but is vital if retailers are to make their operations more productive, effective and profitable in the months ahead."