San Diego based PriceSmart, Inc. (NASDAQ: PSMT) has an innovative business model. The $2.2 billion-dollar US based warehouse club operates members-only Costco-style retail locations outside of the US, in several Latin American and Caribbean countries. The company faces limited direct competition with its business model and has become indispensable for residents and US expatriates seeking American staples.
UPDATE: We finally did receive a follow up from the store call the evening of December 12th, the following week.
For example, in Colombia it is maybe the only reliable destination for American-style bacon, cottage cheese, Heinz pickle relish, real cheddar cheese, Tide laundry detergent, Downy fabric softener, and ahem…toilet paper that doesn’t “melt in your hand.” The retailer also features wild caught salmon, USDA meat cuts including whole racks of ribs, and in season, one can find whole turkeys, American hams, and even frozen cranberries. PriceSmart also offers a wide variety of popular domestic brands in the locales where it operates.
The company has been expanding its offering, mirroring amenities common in US big-box retail. In Medellín there is an in-store eyeglass offering and an audiologist who can offer hearing aids. In the garage there is a tire sales and installation shop.
Despite the company’s success, as a publicly traded company, it is strangely media-shy. Finance Colombia has reached out many times to discuss the firm’s growth and success over the years, but they have always declined to be interviewed or even comment. There is no problem there, some companies are secretive by nature, but that’s odd for consumer facing brands. We have reached out to both headquarters in the US and their Panamá based communications professional in the past
A lack of communication is also not good for customers. PriceSmart offers major appliances along with its staples and consumer packaged goods. When this customer purchased a large Mabe (a domestic Colombian brand) freezer—to fill with Pricesmart hams and turkeys no doubt—he checked with the PriceSmart delivery dispatch desk at the front of the store to confirm that it could be delivered by the next Tuesday. The dispatcher spent a few minutes in her computer before confirming that it could.
The purchase was made, along with several hundred dollars of meat and poultry, and Tuesday’s schedule was cleared in anticipation of the big delivery. When Tuesday came and went, we went to call Pricesmart but discovered alarmingly, there is no phone number for the store…for any Pricesmart store! No freezer, no phone number!
I would have returned to the store in person to inquire, but we live outside of the city, over an hour away. Our monthly visits down into the city to Pricesmart have always been whole-day events where we also make restaurant reservations, do other shopping, and run errands, but with the Pricesmart visit the centerpiece of the day’s agenda.
There was an email address for customer service, so we wrote. Three hours later, we got an email from Ivan, the “Outstanding Experience Specialist” asking for a copy of our receipt which was sent.
Then more silence.
Two hours later, we wrote back (in Spanish): “Is there any news? We need our freezer, please.”
90 minutes later, Ivan wrote back (in Spanish): “Thank you for contacting us. We inform you that we have escalated your case to our operations department with the goal of reviewing where we are in the delivery of your product. Whatever other case or comment, don’t doubt in contacting me, I’m here to serve you.”
Meanwhile, my wife and I both were trying to use the chat function built into their smartphone app, but it was a bot, not a real person, and useless. When a consumer company refuses to be contacted by voice, it tells you that service isn’t the priority.
I found that if you kept at it enough, something triggered in the chat app and eventually a support agent took over the chat. He or she (not sure) also asked for a copy of the receipt and said to wait a few minutes. Returning to the chat, he said they had no record of the order or purchase and were going to have to search receipts of the previous weekend to see if they could find anything that corresponded to our purchase!
So now alarmed, as Pricesmart had our several hundred dollars for the appliance but did not seem to have any idea where it was, or even a record of the purchase. We wrote Ivan, the “Outstanding Experience Specialist” back (again, in Spanish):
“Is our freezer coming today? It is now more than a day late, and nobody will show their face. We can’t call. I spent (several hundred dollars on an appliance and they promised it yesterday, and nobody called, or anything! And now nobody knows where it is?”
We never heard from Ivan the “Outstanding Experience Specialist” again.
In fact, nobody from Pricesmart ever responded, answered, followed up, or anything whatsoever.
What did happen, fortunately, is we were contacted the next day (two days after delivery was promised) by factory representatives from Mabe, the manufacturer. They called and asked if Saturday would work for delivery. When we told them that we were promised delivery two days earlier, they said that only that day, Thursday, did they receive the order from Pricesmart, meaning nobody ever sent it!
Mabe showed up as they promised Saturday morning with the machine in good working order, but we never heard again from Pricesmart. We are still waiting for them to respond to our email, or our chat. Or say “we are sorry, we screwed up,” or anything whatsoever.
So what is our takeaway? We have been paying Pricesmart members for several years now, and for certain items, there are few alternative options. Big ticket appliances are not one of them, as there are many competing alternatives. We did buy a dishwasher from Pricesmart a few years ago, but it was the floor demo, so we arranged our own transportation that time.
While we will likely remain members and continue to shop regularly, I am now hesitant about any purchase that requires service and customer support due to the lack of ability to communicate with anyone via telephone, the lack of responsiveness even via email or chat (we are still waiting!), and the logistical failures in simply not honoring commitments to deliver purchased items in a timely fashion. While mistakes do happen, the failure to communicate seems to say that service and satisfaction are not priorities.
Hopefully the company improves. They have a good thing going, little direct competition when it comes to their business model and have been expanding rapidly. They have a second Medellín store set to open in a few months. Growth is hard, and many companies, lose their mojo as they expand. This experience has exposed a big weakness in their model that we hope they fix, for the good of their employees, shareholders, and customers.