Features
Customer Service, Estonian-Style
In-laws' roots lead marketing professor to explore retail shelves and practices in Baltic states
BY REBECCA KENDALL
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| Although retail operations in Estonia have become more westernized with the development of large stores and commercial malls, in many ways they still run as they did under the Soviet system, says Prof. Brent McKenzie. Photo by Martin Schwalbe |
It's been 16 years since Estonia regained independence from the former Soviet Union, and in that time the country has become one of the fastest-growing retail markets in the European Union in per capita sales, says Prof. Brent McKenzie, Marketing and Consumer Studies, who joined U of G in September from the University of Western Ontario. The fastest-growing retail market is Latvia, says McKenzie, who's been studying retailing in Estonia for the past decade and had a career in business and finance before becoming an academic.
“I had expected to stay in finance,” says McKenzie, who worked for Nortel, the Royal Bank of Canada and Canadian Tire, where he spent five years in the company's corporate planning, treasury and supply chain departments. “But my colleagues and close friends at Canadian Tire advised me to consider academia because of the limitations of working from within the retailing business in terms of being able to explore questions of personal interest. At that point I liked the field of retailing, and I thought teaching and researching would be a satisfying career shift.”
McKenzie, who already held a BA in history from McMaster University, a diploma in business administration from Wilfrid Laurier and an MBA from Dalhousie, enrolled in a PhD program at Griffith University in Queensland, Australia. He graduated in 2006.
His decision to study retailing in Estonia came after sitting around a campfire talking to his wife's family about their homeland one summer evening in 1997. Since then, he's been to Estonia, as well as the two other Baltic states of Latvia and Lithuania, nine times. He's planning his next visit there for May 2008. In addition to doing field research, he'll be teaching a master's course in international consumer behaviour at Lithuania's ISM University of Management and Business.
“My wife's parents and grandparents left Estonia by boat after the return of Soviet forces in 1944,” says McKenzie. “My father-in-law still remembers the Soviet voices from the loudspeakers telling people to remain in Estonia when they were getting on the boat to leave. His mother was wearing as many of her husband's suits as she could because people could bring only what they could carry.”
The family eventually made their way to Toronto, which has the largest Estonian population outside of Estonia, he says.
“The passion of the people of that generation resonates with me. My wife's grandfather died just two days after Estonia achieved freedom from the Soviet Union. His family was grateful that he lived to see that happen.”
With that freedom came a whole new way of life for Estonians, says McKenzie, whose work has been published in the European Retail Digest, International Retailing in Europe, Estonian Business Review, Journal of East-West Business and Management Decision.
“Retailing has changed drastically since the Soviet period,” says McKenzie, whose research has expanded to Estonia's neighbouring countries of Latvia and Lithuania. “The Soviet period was rife with shortages, substandard products and prices set by the government. It wasn't unusual for people to buy 10 toasters, for example, because they never knew when toasters would become available to them again. Also, they could use those extra appliances to trade for things they wanted.”
One of today's most popular shopping spots in Estonia's capital city of Tallinn is Tallinna Kaubamaja, a large department store whose history he is currently analyzing.
“It's an interesting case study because it opened during the Soviet period in 1960, has survived through conflict and economic hardships, was privatized in the 1990s and still continues to do extremely well.”
Although the shelves are well-stocked and the business operators are working to modernize the service they provide, there have been some obstacles, he says.
“There still isn't a lot of interaction between staff and customers. They'll greet you if you greet them, but they pretty much stand back while customers look around.”
There are some other notable differences, says McKenzie, recalling an incident in 1999 when he went to an Estonian store to buy a travel bag.
“I took the bag to the counter to pay for it, and the employee took it and put it back on the shelf. I didn't know what was going on, but then the clerk went into the back and reappeared with the same style of bag for me to buy.”
He says this is a holdover from the Soviet period when customers would go to the counter, ask an employee for the item they wanted to buy, move to another line to pay a second employee, then move to a third line to receive their purchase from still another staff member, he says.
On another occasion, a store clerk asked to see his passport when he went to the checkout to pay for an item.
“I asked why, and he had no real explanation. It continues to be a very top-down system where employees don't have answers to explain the things they do. They don't ask their employers a lot of questions and aren't encouraged to offer suggestions about ways to improve service. Retail has certainly become more westernized with the development of large stores and commercial malls, but in many ways they still operate like they did under the Soviet system.”
McKenzie is also examining the operation and success of a more recent addition to the retail landscape, the Finnish department store Stockmann, which opened in Talinn in 1996.
In addition, he's looking at the consumer behaviour of the Russians in these markets and the customer service they receive. Ethnic Russians make up close to 30 per cent of the population in Estonia, 50 per cent in Latvia's capital city of Riga and about 10 per cent in Lithuania, he says.
“There's still some overt and covert hostility towards the ethnic Russians because they represent the Soviet occupation. Russians are used to rules and regulations, and Estonians value freedoms now that they've regained their independence. My question is: ‘Should retailers be marketing the same to everyone or should they be tailoring their services in different ways?' It's not a trivial population.”